Insider Buying

United Airlines continues to see insider buying

United Airlines Holdings Inc
(UAL:US)
12 months:
-18.19%
Activity:
Bullish
Pattern:
Purchase from board member
News:
Q2 results
United Airlines Holdings Inc
(UAL:US)
12 months:
-18.19%
Activity:
Bullish
Pattern:
Purchase from board member
News:
Q2 results

Insiders have access to real-time information on their companies and often also have a wealth of experience that can help them evaluate their firms’ prospects. If these individuals are buying company stock, it’s generally worth taking a closer look.

In this report, we are going to highlight some interesting insider buying at United Airlines Holdings Inc (UAL:US). United Airlines is a major American airline company. By fleet size and number of routes, it is the third-largest airline in the world. The company is listed on the Nasdaq and currently has a market cap of $12.16 billion.

$1.8 million stock purchase from an insider

Our insider transaction data shows that recently, board member Edward Shapiro – who invested over $4 million in United Airlines stock in the first half of June – has continued to buy stock.

On July 25, the insider picked up an additional 25,000 shares at a price of $35.84 per share. Then, on July 26, he added another 25,000 shares at a price of $35.64 per share.

These two trades cost Mr. Shapiro a total of around $1.8 million and increased his holding by 50% to 150,000 shares.

Experienced investor

We noted in our last coverage of United Airlines that Mr. Shapiro is an experienced investor. Previously, he served as a Managing Partner of PAR Capital Management, where he specialized in travel, media, and Internet-related companies. Before this, he was a Vice President at Wellington Management Company, and before that an analyst at Morgan Stanley & Co. Given his background, it’s fair to assume that he knows what he is doing here.

Low valuation

United Airlines shares have had a huge pullback recently. Back in May, the stock was trading above $50. Now, however, it’s near $35. Escalating fuel and non-fuel costs have been one driver of the weakness. Operational challenges that are likely to result in fewer flights than previously planned have been another.

After this pullback, the stock now looks very cheap from a medium-term perspective. With analysts forecasting earnings per share of $6.20 for 2023, the stock is trading on a P/E ratio of just 5.9, well below the market average and significantly below rival American Airlines’ multiple of 7.7.

It’s worth noting that there were some positives in United's recent Q2 results. Not only did the company achieve its highest second-quarter revenue in its history (up 6% on the same quarter in 2019) but it also delivered its first profitable quarter since Covid began. Additionally, the company generated record-setting TRASM (Total Revenue Per Available Seat Mile), up 24% versus the same quarter in 2019.

In light of these positives, and the low valuation here, we see the insider buying as a bullish indicator.

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