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Here's Why You Should Retain Delta (DAL) in Portfolio Now
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Delta Air Lines, Inc. (DAL - Free Report) is being aided by buoyant air-travel demand and solid liquidity. Nonetheless, escalating fuel cost remains a concern.
Factors Favoring DAL
Upbeat air-travel demand boosts Delta. This is also evident from the fact that total operating revenues increased 36.49% in second-quarter 2022 from year-ago levels. Backed by strong booking trends for summer, the company expects June-quarter revenues (adjusted) to increase in the 15-17% band from second-quarter 2022 actuals. Operating margin for full-year 2023 is expected to be between 10% and 12%.
Delta’s liquidity position is encouraging. The airline ended first-quarter 2023 with cash and cash equivalents of $6,611 million, much higher than the current maturities of debt and financial lease of $2,136 million. This implies that the company has sufficient cash to meet its current debt obligations. DAL's efforts to repay its debts are encouraging too.
Key Risks
Escalating fuel costs pose a threat to Delta’s bottom line. Oil price is moving north primarily because of supply concerns due to Russia's invasion of Ukraine. In first-quarter 2023, average fuel price per gallon (adjusted) increased 10% from first-quarter 2022 actuals to $3.06. Management expects fuel price per gallon (adjusted) in the $2.55-$2.80 range for the June quarter.
Some better-ranked stocks for investors interested in the Zacks Transportation sector are Copa Holdings, S.A. (CPA - Free Report) and Allegiant Travel Company (ALGT - Free Report) .
Copa Holdings, which presently sports a Zacks Rank #1 (Strong Buy), is aided by improved air-travel demand. We are encouraged by the company’s initiatives to modernize its fleet. CPA's focus on its cargo segment is also impressive. You can see the complete list of today’s Zacks #1 Rank stocks here.
For second-quarter and full-year 2023, CPA’s earnings are expected to register 765.6% and 75.4% growth, respectively, on a year-over-year basis.
Allegiant, currently flaunting a Zacks Rank #1, also benefits from buoyant air-travel demand. With air-travel demand rising in the United States, operating revenues improved 8.5% year over year in 2022.
Management expects revenues to remain strong in 2023 as well. In first-quarter 2023, operating revenues increased 29.9% on a year-over-year basis. For second-quarter and full-year 2023, ALGT’s earnings are estimated to surge 366% and 192%, respectively, on a year-over-year basis.
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Here's Why You Should Retain Delta (DAL) in Portfolio Now
Delta Air Lines, Inc. (DAL - Free Report) is being aided by buoyant air-travel demand and solid liquidity. Nonetheless, escalating fuel cost remains a concern.
Factors Favoring DAL
Upbeat air-travel demand boosts Delta. This is also evident from the fact that total operating revenues increased 36.49% in second-quarter 2022 from year-ago levels. Backed by strong booking trends for summer, the company expects June-quarter revenues (adjusted) to increase in the 15-17% band from second-quarter 2022 actuals. Operating margin for full-year 2023 is expected to be between 10% and 12%.
Delta’s liquidity position is encouraging. The airline ended first-quarter 2023 with cash and cash equivalents of $6,611 million, much higher than the current maturities of debt and financial lease of $2,136 million. This implies that the company has sufficient cash to meet its current debt obligations. DAL's efforts to repay its debts are encouraging too.
Key Risks
Escalating fuel costs pose a threat to Delta’s bottom line. Oil price is moving north primarily because of supply concerns due to Russia's invasion of Ukraine. In first-quarter 2023, average fuel price per gallon (adjusted) increased 10% from first-quarter 2022 actuals to $3.06. Management expects fuel price per gallon (adjusted) in the $2.55-$2.80 range for the June quarter.
Zacks Rank
Currently, DAL carries a Zacks Rank #3 (Hold).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Stocks to Consider
Some better-ranked stocks for investors interested in the Zacks Transportation sector are Copa Holdings, S.A. (CPA - Free Report) and Allegiant Travel Company (ALGT - Free Report) .
Copa Holdings, which presently sports a Zacks Rank #1 (Strong Buy), is aided by improved air-travel demand. We are encouraged by the company’s initiatives to modernize its fleet. CPA's focus on its cargo segment is also impressive. You can see the complete list of today’s Zacks #1 Rank stocks here.
For second-quarter and full-year 2023, CPA’s earnings are expected to register 765.6% and 75.4% growth, respectively, on a year-over-year basis.
Allegiant, currently flaunting a Zacks Rank #1, also benefits from buoyant air-travel demand. With air-travel demand rising in the United States, operating revenues improved 8.5% year over year in 2022.
Management expects revenues to remain strong in 2023 as well. In first-quarter 2023, operating revenues increased 29.9% on a year-over-year basis. For second-quarter and full-year 2023, ALGT’s earnings are estimated to surge 366% and 192%, respectively, on a year-over-year basis.