Last update on 2024-06-05

United Airlines Holdings (UAL) - Piotroski F-Score Analysis for Year 2023 (Final Score: 7/9)

Deep dive into United Airlines Holdings (UAL) Piotroski F-Score Analysis for 2023. Discover its profitability, liquidity, and operational efficiency.

Short Analysis - Piotroski Score: 7

We're running United Airlines Holdings (UAL) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

The Piotroski F-Score is a model that helps investors identify financially strong and undervalued stocks using nine criteria involving profitability, liquidity, and leverage. United Airlines Holdings (UAL) has a score of 7 out of 9 based on recent evaluations. #### Profitability: 1. Positive Net Income in 2023: $2.618 billion (1 point). 2. Positive Cash Flow from Operations (CFO) in 2023: $6.911 billion (1 point). 3. Improved Return on Assets (ROA): Increased from 0.0109 in 2022 to 0.0378 in 2023 (1 point). #### Liquidity: 1. Leverage reduced from 0.4878 in 2022 to 0.417 in 2023 (1 point). 2. Current Ratio decreased from 1.0033 in 2022 to 0.8326 in 2023 (0 points). 3. Shares Outstanding increased from 326,930,321 in 2022 to 327,800,000 in 2023 (0 points). #### Operations: 1. Gross Margin increased from 0.2367 in 2022 to 0.2829 in 2023 (1 point). 2. Asset Turnover improved from 0.6634 in 2022 to 0.7759 in 2023 (1 point). 3. Operating Cash Flow higher than Net Income: $6.91 billion vs $2.62 billion (1 point).

Insights for Value Investors Seeking Stable Income

With a Piotroski F-Score of 7 out of 9, United Airlines Holdings (UAL) demonstrates solid financial health and favorable profitability. While liquidity shows some room for improvement with a reduced current ratio and increased shares, the overall trends in leverage, operational efficiency, and cash flow indicate strong recovery and operational robustness in the post-pandemic period. As an investor, UAL is worth considering because the score reflects good financial practices and growth potential, though keeping an eye on liquidity metrics would be prudent.

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Profitability of United Airlines Holdings (UAL)

Company has a positive net income?

The Net Income criteria in the Piotroski analysis checks whether a company has a positive net income in the most recent fiscal year. Positive net income indicates profitability.

The net income for United Airlines Holdings in 2023 stands at $2,618,000,000. This value is positive and marks a substantial rebound from losses observed in recent years, particularly the massive net income dip of -$7,069,000,000 in 2020 during the COVID pandemic. The positive net income in 2023 contributes 1 point in the Piotroski analysis, indicating improving profitability as the travel industry continues its recovery.

Company has a positive cash flow?

Cash Flow from Operations (CFO) criterion checks the ability of the company to generate cash from its core business operations. Positive cash flow is essential for supporting ongoing operations and investments without needing external financing.

United Airlines Holdings (UAL) posted a CFO of $6,911,000,000 for 2023, which is a positive value. This is a strong indicator of the company's ability to generate substantial cash from its core business operations. Compared to the historical data over the last 20 years, United Airlines had several periods of negative CFOs, notably in 2008 and 2020 with -$1,239,000,000 and -$4,133,000,000, respectively. The positive trend in recent years, especially the rebound in 2023, signals robust operational efficiency and financial health after a challenging period during the pandemic. Therefore, this criterion would score a full 1 point for United Airlines Holdings.

Return on Assets (ROA) are growing?

Return on Assets, or ROA, gauges a company's profitability in relation to its total assets. A higher ROA indicates better asset efficiency.

The ROA for United Airlines Holdings (UAL) improved from 0.0109 in 2022 to 0.0378 in 2023. This uptick is a positive trend, suggesting enhanced efficiency in using assets to generate profits. When comparing this to the industry's median ROA, which grew from 0.1607 to 0.198 in the same period, UAL's ROA lags behind. Nonetheless, the improvement still reflects a significant advancement in UAL's performance, earning 1 point based on the Piotroski criterion.

Operating Cashflow are higher than Netincome?

The criterion checks if Operating Cash Flow is higher than Net Income and indicates quality of earnings.

For United Airlines Holdings (UAL) in 2023, the Operating Cash Flow (OCF) was $6.91 billion, while the Net Income was $2.62 billion. Since OCF is significantly higher than Net Income, we add 1 point for this criterion, signaling a good quality of earnings. Over the past 20 years, OCF has also shown resilience with most years posting strong figures, though fluctuations were visible during exceptional years, such as during economic crises or the pandemic.

Liquidity of United Airlines Holdings (UAL)

Leverage is declining?

Leverage is important because it indicates the proportion of debt a company is using to finance its assets. High leverage can be risky, especially during economic downturns.

Comparing the leverage ratios of 0.4878 in 2022 and 0.417 in 2023, UAL's leverage has decreased. This is a positive sign, indicating better debt management and reduced financial risk. Over the past 20 years, UAL's leverage peaked at 0.5241 in 2021 but has been reducing since then, which is a good trend signifying improved financial stability.

Current Ratio is growing?

The current ratio is a liquidity ratio that measures a company's ability to pay short-term obligations with its short-term assets. It is calculated as current assets divided by current liabilities and is essential in assessing the financial health of a company.

For 2023, the current ratio for United Airlines Holdings (UAL) is 0.8326, which marks a decrease from 1.0033 in 2022. This decline indicates that UAL's short-term financial health has worsened, as the company now has fewer current assets relative to its current liabilities compared to the previous year. Historically, UAL's current ratio has shown fluctuations but has often stayed below the current industry median. In 2023, both UAL and the industry median current ratios have decreased; however, UAL's decline is more significant. The lower current ratio in 2023 could potentially raise concerns about UAL's liquidity and ability to cover short-term obligations, especially when compared to the industry median current ratio of 0.8112. Given this, UAL's score for this Piotroski criterion is 0.

Number of shares not diluted?

The criterion evaluates whether the company's number of outstanding shares has decreased compared to the previous year. It is important because issuing more shares can dilute ownership and earnings per share.

From 2022 to 2023, the outstanding shares for United Airlines Holdings (UAL) increased from 326,930,321 to 327,800,000. When evaluating the change in outstanding shares, we award a point if the shares have decreased. Since there has been an increase, we do not award a point (resulting in 0 points). Over the last 20 years, UAL has had fluctuations in its number of shares, peaking at 390,000,000 in 2014 and showing a generally decreasing trend since then, stabilizing somewhat in recent years. The increase from 2022 to 2023, however, suggests potential dilution which could concern investors.

Operating of United Airlines Holdings (UAL)

Cross Margin is growing?

Gross Margin is a critical metric that reflects a company's financial health by indicating the percentage of revenue that exceeds the cost of goods sold. An increasing Gross Margin suggests improving efficiency.

United Airlines Holdings (UAL) has seen its Gross Margin increase from 0.2367 in 2022 to 0.2829 in 2023. This increase is a positive trend as it suggests that the company is becoming more efficient in managing its cost of goods sold relative to its revenue. When we look at the historical data over the past 20 years, UAL's current Gross Margin of 0.2829 is still below its high points during the 2003 to 2007 period but represents a significant recovery from the pandemic-impacted years, especially from the negative margin in 2020. Compared to the industry median Gross Margin, which was 0.198 in 2023, UAL is performing better, indicating above-average efficiency for the industry. Consequently, for the Piotroski analysis, an increase in Gross Margin from the previous year adds 1 point to UAL's score, signifying a noteworthy enhancement in operational efficiency.

Asset Turnover Ratio is growing?

Asset Turnover represents the efficiency of a company's use of its assets to generate sales revenue.

In 2023, United Airlines Holdings (UAL) recorded an Asset Turnover ratio of 0.7759, as compared to 0.6634 in 2022. This represents an increase in the Asset Turnover ratio, which suggests that UAL has become more efficient in using its assets to generate sales. Historically, UAL has experienced fluctuations in its Asset Turnover, highlighted by high ratios in years such as 2011 (0.9566) and 2010 (0.7971) and a notable decrease during the pandemic in 2020 (0.2738). The rise from 0.6634 in 2022 to 0.7759 in 2023 sets a positive trend, scoring 1 point on the Piotroski Analysis, which is a good indicator for investors.