Key Takeaways:
- The 2-Minute Valuation Model values United Airlines stock at $95 per share in 2 years.
- That’s a potential 28% upside from today’s price of $74 per share.
- UAL stock is projected to grow EPS by over 32% over the next 3 years
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United Airlines (UAL) is executing a remarkable transformation from a traditional legacy carrier into what CEO Scott Kirby calls “a loyalty machine that runs an airline.”
With 570 million passengers annually and a global network spanning seven premium hubs, United has established itself as the clear leader in brand loyalty and premium service.
The airline has successfully navigated recent operational challenges at Newark while maintaining its position as the world’s largest international gateway to Europe and Asia.
With UAL stock now trading around $74 per share, United presents a compelling opportunity for investors seeking exposure to the structural shift toward premium air travel and brand loyalty.
Let’s examine why UAL stock looks attractive using our 2-Minute Valuation Model.
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What is the 2-Minute Valuation Model?
Three core factors drive a stock’s long-term value:
- Revenue Growth: How big the business becomes.
- Margins: How much the business earns in profit.
- 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 Looks Undervalued
Forecast
Based on analyst estimates, United Airlines is expected to achieve solid earnings-per-share growth over the next three years.
EPS is projected to grow from $10.61 in 2024 to $14 by 2027, representing a 32% increase in total.
This earnings growth for UAL stock is likely to be driven by:
- Brand Loyalty Leadership: United has won brand-loyal customers across all seven hubs, creating a sustainable advantage that competitors find difficult to replicate.
- Premium Product Innovation: New Polaris Studio suites, enhanced domestic first class, and industry-leading technology platforms drive higher revenue per passenger.
- International Network Dominance: Unmatched global gateway positions in Newark, San Francisco, and Dulles provide structural advantages.
- Operational Excellence: Recent operational improvements in Newark, combined with AI-driven enhancements to customer service, could improve reliability and customer satisfaction.
For our valuation, we estimate that UAL stock will reach $13.50 in EPS by 2027.
Check out UAL’s full analyst estimates (It’s free) >>>
Is United Airlines Stock Undervalued Right Now?
United Airlines stock trades at around 7x forward earnings, which is below its 3-year historical average P/E of 6x, as shown in the valuation chart.
Given the company’s leadership in brand loyalty, expansion of its premium network, and proven ability to drive earnings growth even in challenging environments, a forward P/E multiple of 7x appears reasonable for our conservative valuation.
Fair Value of United Airlines Stock
Using our 2-Minute Valuation Model and applying a conservative approach:
- Conservative 2027 EPS estimate: $13.50
- Conservative forward P/E multiple: 7x
Expected Normalized EPS ($13.50) * Forward P/E ratio (7x) = Expected Share Price ($95)
The 2-year expected UAL stock price we would get from this valuation is $95 per share.
With United Airlines stock currently trading at around $74 per share, this implies a potential upside of 28% over the next two years or a 13% annualized return.
UAL stock is well-positioned to deliver outsized gains to shareholders, given that the broader markets’ average annual returns have been around 10%.
Remember, this is just a valuation exercise, and we don’t know for sure what the stock’s price will be in the future.
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What is the UAL Stock Average Analyst Price Target?
Analysts are increasingly optimistic about United’s growth prospects. The consensus UAL stock target price is approximately $95 per share, indicating analysts see about 28% upside from current levels.
Risks to Consider
Despite the bullish outlook, investors should be aware of several risks that could impact United Airlines’ growth trajectory:
- Economic Sensitivity: Airlines are cyclical businesses that can be impacted by economic downturns, which in turn affect travel demand.
- Fuel Price Volatility: Jet fuel costs represent a sizeable operational expense that can impact margins.
- Regulatory Changes: FAA regulations and slot restrictions at key airports could limit growth opportunities.
- Competition: Other airlines are attempting to copy United’s premium strategy, although CEO Kirby notes that this requires doing “110% of what United does.”
TIKR Takeaway
United Airlines presents a unique investment opportunity in the rapidly evolving aviation landscape.
The potential upside for UAL stock is driven by industry-leading brand loyalty, unmatched international network advantages, premium product innovation, and operational excellence that creates sustainable competitive moats.
While economic headwinds exist, United’s transformation from a traditional carrier to a “loyalty machine that runs an airline” is creating durable competitive advantages.
CEO Scott Kirby’s vision of becoming “the best airline in the history of aviation” combined with the company’s structural advantages in premium markets positions it well for long-term growth.
Management’s focus on maintaining industry-leading margins, disciplined capital allocation, and continued investment in customer experience provides confidence in United’s ability to capitalize on the permanent shift toward premium air travel and brand loyalty.
Is UAL stock a buy over the next 24 months? Use TIKR to check the stock’s analyst price targets and growth forecasts to see if it is undervalued today.
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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!
