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Should Investors Buy Delta Air Lines (DAL) Stock After Mixed Q3 Results?
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Delta Air Lines (DAL - Free Report) gave a glimpse at how the large domestic airliners are faring after reporting third quarter results on Thursday with United Airlines (UAL - Free Report) and American Airlines (AAL - Free Report) set to release their Q3 reports in the coming weeks.
Although Delta’s Q3 financial metrics were mixed the company’s valuation and post-pandemic recovery are still enticing.
Delta’s Q3 Results
Delta posted Q3 EPS of $1.50 on operating income of $971 million which decreased 26% from $2.03 per share in the prior year quarter on earnings of $1.31 billion. This also missed Q3 EPS estimates of $1.56 by -4%.
Notably, the year over year decline in Delta’s bottom line was attributed to a global technology outage earlier in the quarter after a malfunction in a software update by security vendor CrowdStrike (CRWD - Free Report) led to thousands of flight cancellations.
Still, Delta’s Q3 sales of $15.67 billion beat expectations of $15.37 billion by 2% and was up 1% from a year ago despite incurring a $500 million loss from the faulty software update.
Image Source: Zacks Investment Research
Tracking Delta’s Outlook
Optimistically, Delta expects improved trends to continue in regards to post-pandemic travel demand, stating bookings for the Q4 holiday season are strong. Delta anticipates record Q4 revenue of $14.5-$14.8 billion which came in above the current Zacks Consensus of $14.52 billion or 2% growth.
Delta’s full-year revenue projections for fiscal 2024 call for 2%-4% growth which fell in line with Zacks estimates of 3% growth or $59.85 billion in sales. Based on Zacks estimates, Delta’s total sales are forecasted to rise another 5% in FY25 to $62.91 billion.
Image Source: Zacks Investment Research
Fourth quarter EPS projections of $1.60-$1.85 also came in range with the Zacks Consensus of $1.82 per share which would be a 42% increase from $1.28 a share in Q4 2023 (Current QTR below).
Delta now expects full-year FY24 EPS of $6.00-$7.00 compared to previous guidance of over $7 a share although this lines up with estimates of $6.17 per share, a decline of -1% from 2023.
That said, FY25 EPS is projected to rebound and soar 17% to $7.26 based on Zacks estimates.
Image Source: Zacks Investment Research
DAL Performance & Valuation
Trading around $50, Delta’s stock is up +25% in 2024 and has been virtually flat in today’s trading session. Year to date, DAL has trailed United Airlines' gains of +47% but has slightly edged the benchmark S&P 500’s performance and American Airlines' +15%.
Image Source: Zacks Investment Research
Most intriguing is that DAL still trades at just 8.1X forward earnings and at a steep discount to the benchmark’s 24.5X. Delta’s stock also trades beneath its Zacks Transportation-Airline Industry average of 10.1X forward earnings with American Airlines at 9.6X and United Airlines at 6.1X.
Image Source: Zacks Investment Research
Bottom Line
Delta’s stock currently lands a Zacks Rank #3 (Hold). While Delta’s Q3 results weren’t overwhelming the company’s outlook remains attractive. Futhermrore, holding DAL may certainly be rewarding given Delta's upbeat guidance for the upcoming holiday season.
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Should Investors Buy Delta Air Lines (DAL) Stock After Mixed Q3 Results?
Delta Air Lines (DAL - Free Report) gave a glimpse at how the large domestic airliners are faring after reporting third quarter results on Thursday with United Airlines (UAL - Free Report) and American Airlines (AAL - Free Report) set to release their Q3 reports in the coming weeks.
Although Delta’s Q3 financial metrics were mixed the company’s valuation and post-pandemic recovery are still enticing.
Delta’s Q3 Results
Delta posted Q3 EPS of $1.50 on operating income of $971 million which decreased 26% from $2.03 per share in the prior year quarter on earnings of $1.31 billion. This also missed Q3 EPS estimates of $1.56 by -4%.
Notably, the year over year decline in Delta’s bottom line was attributed to a global technology outage earlier in the quarter after a malfunction in a software update by security vendor CrowdStrike (CRWD - Free Report) led to thousands of flight cancellations.
Still, Delta’s Q3 sales of $15.67 billion beat expectations of $15.37 billion by 2% and was up 1% from a year ago despite incurring a $500 million loss from the faulty software update.
Image Source: Zacks Investment Research
Tracking Delta’s Outlook
Optimistically, Delta expects improved trends to continue in regards to post-pandemic travel demand, stating bookings for the Q4 holiday season are strong. Delta anticipates record Q4 revenue of $14.5-$14.8 billion which came in above the current Zacks Consensus of $14.52 billion or 2% growth.
Delta’s full-year revenue projections for fiscal 2024 call for 2%-4% growth which fell in line with Zacks estimates of 3% growth or $59.85 billion in sales. Based on Zacks estimates, Delta’s total sales are forecasted to rise another 5% in FY25 to $62.91 billion.
Image Source: Zacks Investment Research
Fourth quarter EPS projections of $1.60-$1.85 also came in range with the Zacks Consensus of $1.82 per share which would be a 42% increase from $1.28 a share in Q4 2023 (Current QTR below).
Delta now expects full-year FY24 EPS of $6.00-$7.00 compared to previous guidance of over $7 a share although this lines up with estimates of $6.17 per share, a decline of -1% from 2023.
That said, FY25 EPS is projected to rebound and soar 17% to $7.26 based on Zacks estimates.
Image Source: Zacks Investment Research
DAL Performance & Valuation
Trading around $50, Delta’s stock is up +25% in 2024 and has been virtually flat in today’s trading session. Year to date, DAL has trailed United Airlines' gains of +47% but has slightly edged the benchmark S&P 500’s performance and American Airlines' +15%.
Image Source: Zacks Investment Research
Most intriguing is that DAL still trades at just 8.1X forward earnings and at a steep discount to the benchmark’s 24.5X. Delta’s stock also trades beneath its Zacks Transportation-Airline Industry average of 10.1X forward earnings with American Airlines at 9.6X and United Airlines at 6.1X.
Image Source: Zacks Investment Research
Bottom Line
Delta’s stock currently lands a Zacks Rank #3 (Hold). While Delta’s Q3 results weren’t overwhelming the company’s outlook remains attractive. Futhermrore, holding DAL may certainly be rewarding given Delta's upbeat guidance for the upcoming holiday season.