Down 38% From All-Time Highs, Is United Airlines Stock a Good Buy?

Key Takeaways:

• The 2-Minute Valuation Model values United Airlines stock at $84 per share in 2 years.
• That’s a potential 22% upside from today’s price of $69.
• UAL stock is expected to experience a temporary earnings dip in 2025 (-3.4%) before resuming double-digit annual growth.
• The airline stock trades at just 6.8x forward earnings, in line with its historical average.
• Get accurate financial data on over 100,000 global stocks for free on TIKR >>>

United Airlines (UAL) has navigated significant turbulence over the past few years, from the pandemic’s devastating impact to ongoing operational challenges facing the airline industry.

Despite these headwinds, analysts remain optimistic about the company’s long-term prospects. Let’s dig into United’s fundamentals and valuation to determine whether UAL stock represents a compelling opportunity at current levels.

Find the best stocks to buy today with TIKR. (It’s free) >>>

What is the 2-Minute Valuation Model?

Three core factors drive a stock’s long-term value:

1. Revenue Growth: How big the business becomes.
2. Margins: How much the business earns in profit.
3. Multiple: How much investors are willing to pay for a business’s earnings.

Our 2-Minute Valuation Model uses a simple formula to value stocks:

Expected Normalized EPS * Forward P/E ratio = Expected Share Price

Revenue growth and margins drive a company’s long-term normalized earnings per share (EPS), and investors can use a stock’s long-term average P/E multiple to get an idea of how the market values a company.

Why United Airlines Stock Could Be Undervalued

Forecast

After a slight earnings dip expected in 2025, United Airlines is projected to deliver strong growth in 2026 and 2027, with EPS increasing by 20% and 14%, respectively.

This suggests that while there might be some near-term challenges, UAL should grow earnings in the near term.

This earnings growth for United Airlines stock is likely to be driven by:

• Network Strength: United has built a strong global route network with valuable international exposure, particularly to Asia and Europe, which should benefit from the continued recovery in international travel.
• Fleet Modernization: UAL is investing in new, more fuel-efficient aircraft, which should help reduce operating costs and improve margins over time.
• Premium Push: The airline has been expanding its premium cabin offerings and focusing on higher-margin business travelers, which could drive improved unit revenue.
• Capacity Discipline: Unlike previous industry cycles, major carriers, including United, have shown restraint in adding capacity, which could lead to better pricing power.

View UAL’s full analyst estimates (It’s free) >>>

Is United Airlines Stock Undervalued Right Now?

UAL stock has averaged a forward P/E of 6.0x over the past three years, with peaks around 14x during recovery periods. Currently, United trades at 6.8x forward earnings, which is slightly above its historical average but still represents a significant discount to the broader market.

This compressed multiple reflects the cyclical nature of the airline industry and investor concerns about capital intensity and limited pricing power. However, it also creates a potential upside if United can deliver on its earnings projections.

For our valuation, we will use a forward P/E multiple of 6.0x, which is in line with the stock’s historical three-year average.

Fair Value of UAL Stock

Using our 2-Minute Valuation Model and applying a conservative approach:

• Conservative 2027 EPS estimate: $14
• Conservative forward P/E multiple: 6x

Expected Normalized EPS ($14) * Forward P/E ratio (6x) = Expected Share Price ($84)

The 2-year expected UAL stock price we would get from this valuation is $84 per share.

With UAL stock currently trading at around $69, this implies a potential upside of approximately 22% over the next two years, or a 10% annualized return.

Keep in mind, this is just a valuation exercise, and we don’t know for sure what the stock’s price will be in the future.

Value stocks quicker with TIKR (It’s free, no credit card required) >>>

What is the Target Price for United Airlines Stock?

Analysts have an average price target of around $92 per share for UAL stock, indicating they see about 33% upside from its current share price:

Risks to Consider

While our valuation suggests meaningful upside, investors should be aware of several risks:

• Airlines are highly cyclical businesses, and an economic downturn could significantly impact travel demand and United’s financial performance.
• Jet fuel is a major cost component for airlines, and unexpected spikes in oil prices could pressure margins.
• Airlines are facing increasing wage pressures, particularly for pilots and flight attendants, which could impact profitability.
• Operational issues, including air traffic control constraints and aircraft delivery delays, continue to affect the entire industry.

TIKR Takeaway

United Airlines appears modestly undervalued at current levels, trading at just 6.8 times its forward earnings, despite expectations for strong earnings growth in 2026 and 2027.

While the projected earnings dip in 2025 presents a near-term concern, the company’s long-term fundamentals remain strong.

With analysts projecting nearly a 33% upside and our model suggesting a more conservative 22% total return over two years, UAL stock could offer a decent risk-reward profile for those willing to bet on the airline industry.

The airline industry may never command premium multiples due to its cyclical nature and capital intensity. However, United’s current valuation provides a margin of safety while still offering upside potential as earnings growth materializes in the coming years.

Is United Airlines stock a buy over the next 24 months? Use TIKR to check the stock’s analyst price targets, growth forecasts, and see if the stock is undervalued today.

Try TIKR today for free!

Looking for New Opportunities?

• See what stocks billionaire investors are buying so you can follow the smart money.
• Analyze stocks in as little as 5 minutes with TIKR’s all-in-one, easy-to-use platform.
• The more rocks you overturn… the more opportunities you’ll uncover. Search 100K+ global stocks, global top investor holdings, and more with TIKR.

Disclaimer:

Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!