United Airlines (UAL) stock price is beating other global airlines like IAG, the parent company of British Airways, Delta, American, and Southwest. Its stock has jumped by 150% this year, while IAG has jumped by 71.35%, Southwest’s 16%, and Delta Air Line’s 61%. This surge has brought its market cap to over $31.8 billion.
United Airlines stock price crossed a key level
The weekly chart shows that the UAL share price has been in a strong bullish trend in the past few months. It has risen for 16 consecutive weeks, something it has never done before.
The stock also recently made a golden cross pattern as the 50-week and 200-week Exponential Moving Averages (EMA) crossed each other. In most periods, this is usually one of the most bullish patterns, especially, when it happens on the weekly chart.
United Airlines shares have also crossed the important resistance level at $64, its highest level in March 2021. Most notably, it has now just flipped the crucial resistance point at $95.85, its highest level in July 2019.
Other technicals are also bullish on the United Airlines share price. The Relative Strength Index (RSI) and the MACD indicators have continued to point upwards, with the former being at the extremely overbought level.
Therefore, there is a likelihood that the stock will continue rising as bulls target the next key resistance level at $100. Still, the risk is that airlines are usually highly cyclical companies that rise and fall. As such, there is a likelihood that it will suffer a harsh reversal in the near term.
UAL stock chart | Source: TradingView
Why UAL stock is beating its peers
There are several reasons why United Airlines is doing better than its global peers like Delta and American.
The most important one is that the company did not fire its pilots during the COVID-19 pandemic. As such, when the industry reopened, it had ready staff as other companies battled with a substantial shortage.
The company has also been at the forefront of its fleet modernization process, a costly move that will make it a more profitable firm in the future. It has ordered 110 new aircraft that will start being delivered in 2028. These places are 50 787-9s and 60 Airbus A321neos. Altogether, its order book is of about 270 planes.
The company has also options for 50 787 and 40 more A321neo planes. It has also ordered 20 Boom Overture supersonic jets that are estimated to be faster and more efficient than the Concorde.
United Airlines is also growing at a faster pace than other companies. Its forward revenue growth is 10%, while Delta and American have much lower metrics.
Most importantly, this growth has come at a profitable level, a situation that has made UAL the second most profitable airline in the US after Delta. It has a net profit margin of 4.95% compared to Delta and America’s 7.7% and 0.51%.
Read more: United Airlines to ‘capitalise on opportunity only $UAL has’ after Q1 earnings
The most recent financial results showed that United’s pre-tax earnings came in at $1.3 billion as its earnings per share jumped. As a result, under Scott Kirby, United Airlines has started to return substantial sums of money to its shareholders, which explains why its stock has jumped.
In the last quarterly earnings, United Airlines said that it would repurchase up to $1.5 billion of outstanding shares. It is also adding new routes to Mongolia and Greenland in a bid to provide more services to its customers.
Additionally, the company is increasing its US business, where it is the third-biggest player. To do that, the company is up gauging, where it is replacing its smaller planes with bigger ones.
Therefore, United Airlines stock is soaring as investors cheer the shareholder returns and the hopes that it can catch up with Delta in terms of profitability.
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