United Airlines UAL is facing significant challenges from increased expenses and weak liquidity. These factors are adversely affecting the company’s bottom line, making it an unattractive choice for investors’ portfolios.
Let’s delve deeper.
UAL: Key Risks to Watch
Southward Earnings Estimate Revision: The Zacks Consensus Estimate for the June-end quarter earnings has moved 57.8% south over the past 60 days. For 2026, the consensus mark for earnings has been revised 11.2% downward on a year-over-year basis. The unfavorable estimate revisions indicate brokers’ lack of confidence in the stock.
Dim Price Performance: The company’s price trend reveals that its shares have dropped 20.3% over the year-to-date period compared with the Transportation - Airline industry’s 13.5% decline.
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Weak Zacks Rank: United Airlines currently has a Zacks Rank #4 (Sell).
Bearish Industry Rank: The industry to which United Airlines belongs currently has a Zacks Industry Rank of 202 (out of 244). Such an unfavorable rank places it in the bottom 17% of Zacks Industries. Studies show that 50% of a stock’s price movement is directly related to the performance of the industry group to which it belongs.
A mediocre stock within a strong group is likely to outperform a robust stock in a weak industry. Hence, reckoning the industry’s performance becomes imperative.
Headwinds: United Airlines continues to face pressure on its financial stability amid elevated operating costs and weak liquidity. Higher crude oil and refining prices have sharply increased fuel expenses, weighing heavily on the company’s cost structure. In the first quarter of 2026, total operating expenses rose 8% year over year to $13.6 billion.
Labor expenses, including salaries and related costs, which account for 33.5% of total operating expenses, increased 9.8% year over year. Meanwhile, landing fees and other rental expenses climbed 7%, while aircraft maintenance materials and outside repair costs rose 6.3%, further intensifying margin pressure.
The company is facing mounting liquidity pressure, as reflected in the steady deterioration of its current ratio from 1.0 in 2022 to 0.83 in 2023, 0.81 in 2024 and 0.65 in 2025. Although the metric improved modestly to 0.70 in the first quarter of 2026, it remained well below the ideal threshold of 1.0. The persistent weakness suggests that the airline’s short-term assets are increasingly inadequate to meet its near-term liabilities, raising concerns about its liquidity position and short-term financial flexibility.
Stocks to Consider
Investors interested in the Zacks Transportation sector may consider Expeditors International of Washington, Inc. EXPD and International Seaways INSW.
EXPD currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Expeditors has an expected earnings growth rate of 11.9% for the current year. The company has an encouraging earnings surprise history. Its earnings outpaced the Zacks Consensus Estimate in each of the trailing four quarters, delivering an average beat of 13.96%.
INSW currently sports a Zacks Rank #1.
INSW has an expected earnings growth rate of more than 100% for the current year. The company has an encouraging earnings surprise history. Its earnings topped the Zacks Consensus Estimate in each of the trailing four quarters, delivering an average beat of 33.93%.
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United Airlines Holdings Inc (UAL): Free Stock Analysis Report
Expeditors International of Washington, Inc. (EXPD): Free Stock Analysis Report
International Seaways Inc. (INSW): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).