United Continental Holdings (NASDAQ:UAL) is expected to report earnings next Tuesday after the market closes. The company's shares last traded at $75.04 early Thursday morning, approximately 98% of its 52 week high. Although the stock is near its high, finbox.io fair value data implies that shares are still 18% undervalued while Wall Street's consensus price target of $84.28 implies 12% upside.Comparable Company Analysis
ROIC = NOPAT / Average Invested Capital
NOPAT is defined as Net Operating Profit After Tax and Average Invested Capital is the average Debt + Equity over the same time period.
United's ROIC does not look highly attractive when compared to its publicly traded peer group: Alaska Air Group, Inc. (NYSE:ALK), Delta Air Lines, Inc. (NYSE:DAL), Southwest Airlines Co. (NYSE:LUV) and American Airlines Group Inc. (NASDAQ:AAL).
These return figures, in part, help explain why the company's EBITDA multiples trade at a discount to this same comparable company group.
The company's financial performance has improved over the last several years and is expected to continue improving.
Note how Wall Street's generally bullish on this entire airline group. However, our unbiased analyses concludes that only United and American Airlines are materially undervalued.
Furthermore, just this morning S&P Capital IQ reiterated its Buy rating on United and noted its positive fundamental outlook on the US airline industry. The research firm believes that, "valuations across the group are likely to expand in '17, on better unit revenue performance."
But which stock's valuation is positioned to improve the most?
Investors may want to take a closer look at United prior to earnings.