NEW YORK (TheStreet) -- United Continental (UAL - Get Report) fell Friday after the airline reported it lost money in the first quarter, while peer companies Southwest Airlines (LUV) and American Airlines Group (AAL) reported record profits.
United lost $609 million in the first quarter. Excluding items, the loss was $1.33 a share. Revenue dipped 0.3% to $8.70 billion. Analysts polled by FactSet had expected a loss of $1.35 a share on $8.71 billion in revenue.
Revenue for every seat flown one mile, a crucial metric for measuring an airline's health, dropped 2%. United cited canceled flights as the primary reason for this decline.
The stock was down 2.67% to $40.42 at 12:45 p.m. on Friday.
Separately, TheStreet Ratings team rates UNITED CONTINENTAL HLDGS INC as a "hold" with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate UNITED CONTINENTAL HLDGS INC (UAL) a HOLD. The primary factors that have impacted our rating are mixed ? some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, revenue growth and notable return on equity. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk, weak operating cash flow and poor profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- UNITED CONTINENTAL HLDGS INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, UNITED CONTINENTAL HLDGS INC turned its bottom line around by earning $1.30 versus -$2.32 in the prior year. This year, the market expects an improvement in earnings ($4.25 versus $1.30).
- UAL's revenue growth trails the industry average of 24.7%. Since the same quarter one year prior, revenues slightly increased by 7.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Airlines industry and the overall market on the basis of return on equity, UNITED CONTINENTAL HLDGS INC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
- Net operating cash flow has significantly decreased to -$334.00 million or 471.11% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- The debt-to-equity ratio is very high at 4.16 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. To add to this, UAL has a quick ratio of 0.55, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
- You can view the full analysis from the report here: UAL Ratings Report