We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Delta (DAL) Up 1.7% Since Last Earnings Report: Can It Continue?
Read MoreHide Full Article
It has been about a month since the last earnings report for Delta Air Lines (DAL - Free Report) . Shares have added about 1.7% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Delta due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Wider-Than-Expected Loss in Q2
The company incurred a loss (excluding $4.58 from non-recurring items) of $4.43 per share , wider than the Zacks Consensus Estimate of a loss of $3.97. Meanwhile, Delta reported earnings of $2.35 per share (on an adjusted basis) in the year-ago quarter, driven by high passenger revenues as air-travel demand was buoyant at that time.
Notably, passenger revenues slumped 94% year over year in the June quarter to $678 million with enplaned passengers plummeting 93% due to low demand for air travel. Cargo revenues declined 42% to $108 million. Revenues from other sources decreased 31% to $682 million. Consequently, total revenues in the June quarter tanked 88.3% to $1,468 million but surpassed the Zacks Consensus Estimate of $1,400.8 million.
Other Financial Details
Revenue passenger miles (a measure of air traffic) tumbled 94% to 3,621 million. With Delta making significant capacity cuts to match the coronavirus-induced sharp decrease in traffic, capacity (measured in available seat miles) contracted 85% to 10,596 million. With the fall in traffic outpacing the capacity reduction, load factor (percentage of seats filled by passengers) was down to 34% from 88% a year ago. Passenger revenue per available seat mile (PRASM) too took a 60% dive year over year tumble to merely 6.4 cents. Passenger mile yield increased to18.73 cents from 18 cents in the second quarter of 2019. On an adjusted basis, total revenue per available seat mile (TRASM) in the second quarter deteriorated 36% year over year to 11.1 cents.
Total operating expenses including special items declined 40% year over year to $6,283 million. Notably, expenses on aircraft fuel and related taxes plunged 84% in the reported quarter. With most of the fleet remaining grounded/under-utilized, fuel gallons consumed moderated 85% to 165 million. Average fuel price per gallon (adjusted) rose 4% to $2.16. Total adjusted operating expense decreased 53 % owing to lower capacity- and revenue-related expenses and prudent cost management. Per Paul Jacobson, Delta’s chief financial officer, “We expect to achieve a similar 50 percent year-over-year reduction in the September quarter despite a sequential increase in capacity, reflecting the increased variability we have achieved in our cost structure.”
The airline had liquidity worth $15.7 billion at the end of the June quarter. Notably, during the quarter, the company raised $11 billion in new liquidity. Daily cash burn was $43 million on average in the reported quarter. However, the same for June was $27 million, reflecting a 70% decline from the levels witnessed in late March.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month. The consensus estimate has shifted -42.23% due to these changes.
VGM Scores
At this time, Delta has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Delta has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Delta (DAL) Up 1.7% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Delta Air Lines (DAL - Free Report) . Shares have added about 1.7% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Delta due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Wider-Than-Expected Loss in Q2
The company incurred a loss (excluding $4.58 from non-recurring items) of $4.43 per share , wider than the Zacks Consensus Estimate of a loss of $3.97. Meanwhile, Delta reported earnings of $2.35 per share (on an adjusted basis) in the year-ago quarter, driven by high passenger revenues as air-travel demand was buoyant at that time.
Notably, passenger revenues slumped 94% year over year in the June quarter to $678 million with enplaned passengers plummeting 93% due to low demand for air travel. Cargo revenues declined 42% to $108 million. Revenues from other sources decreased 31% to $682 million. Consequently, total revenues in the June quarter tanked 88.3% to $1,468 million but surpassed the Zacks Consensus Estimate of $1,400.8 million.
Other Financial Details
Revenue passenger miles (a measure of air traffic) tumbled 94% to 3,621 million. With Delta making significant capacity cuts to match the coronavirus-induced sharp decrease in traffic, capacity (measured in available seat miles) contracted 85% to 10,596 million. With the fall in traffic outpacing the capacity reduction, load factor (percentage of seats filled by passengers) was down to 34% from 88% a year ago. Passenger revenue per available seat mile (PRASM) too took a 60% dive year over year tumble to merely 6.4 cents. Passenger mile yield increased to18.73 cents from 18 cents in the second quarter of 2019. On an adjusted basis, total revenue per available seat mile (TRASM) in the second quarter deteriorated 36% year over year to 11.1 cents.
Total operating expenses including special items declined 40% year over year to $6,283 million. Notably, expenses on aircraft fuel and related taxes plunged 84% in the reported quarter. With most of the fleet remaining grounded/under-utilized, fuel gallons consumed moderated 85% to 165 million. Average fuel price per gallon (adjusted) rose 4% to $2.16. Total adjusted operating expense decreased 53 % owing to lower capacity- and revenue-related expenses and prudent cost management. Per Paul Jacobson, Delta’s chief financial officer, “We expect to achieve a similar 50 percent year-over-year reduction in the September quarter despite a sequential increase in capacity, reflecting the increased variability we have achieved in our cost structure.”
The airline had liquidity worth $15.7 billion at the end of the June quarter. Notably, during the quarter, the company raised $11 billion in new liquidity. Daily cash burn was $43 million on average in the reported quarter. However, the same for June was $27 million, reflecting a 70% decline from the levels witnessed in late March.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month. The consensus estimate has shifted -42.23% due to these changes.
VGM Scores
At this time, Delta has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Delta has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.