United Continental (UAL) Stock Down, DOJ Seeks to Block Newark Slot Acquisitions

United Continental (UAL) stock is falling after the Justice Department filed an antitrust lawsuit to block the company’s planned acquisition of 24 slots in Newark Liberty International Airport.
By Amanda Gomez ,

NEW YORK (TheStreet) -- United ContinentalHoldings (UAL) - Get Report stock is declining 0.1% to $60.09 in midday trading on Tuesday after the Department of Justice filed an antitrust lawsuit to block the carrier's plan to acquire 24 takeoff and landing slots at Newark Liberty International Airport from Delta AirLines (DAL).

United Continental's planned acquisition of the slots, or the right to land or takeoff an airplane at a particular time, would increase the company's dominant position in the New Jersey airport, increasing the challenges for other airlines to hold a positions in the airport.

"A slot is essentially a license to compete at Newark," Assistant Attorney General Bill Baer said in a statement. "United already holds most of them, and as a result, competition at Newark is in critically short supply."

The company holds 902, or 73%, of the 1,233 slots available at the Newark airport, Baer added.

Separately, TheStreet Ratings team rates UNITED CONTINENTAL HLDGS INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

We rate UNITED CONTINENTAL HLDGS INC (UAL) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its solid stock price performance, impressive record of earnings per share growth, compelling growth in net income, notable return on equity and attractive valuation levels. We feel its strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.
  • 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 two years. We feel that this trend should continue. During the past fiscal year, UNITED CONTINENTAL HLDGS INC increased its bottom line by earning $2.79 versus $1.30 in the prior year. This year, the market expects an improvement in earnings ($11.98 versus $2.79).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Airlines industry. The net income increased by 421.2% when compared to the same quarter one year prior, rising from $924.00 million to $4,816.00 million.
  • 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, UNITED CONTINENTAL HLDGS INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • You can view the full analysis from the report here: UAL

Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.

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