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Here's Why Investors Should Retain Delta Air (DAL) Stock Now
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Delta Air Lines, Inc. (DAL - Free Report) is benefiting from its improved air-travel demand and solid liquidity. However, escalating fuel costs are worrisome.
Factors Favoring DAL
Improved air-travel demand, particularly on the domestic front, is aiding Delta. Owing to the positive, DAL reported better-than-expected earnings per share and revenues in second-quarter 2023. Third-quarter earnings are expected in the range of $2.2-$2.5 per share. Adjusted operating margin in the September quarter is suggested in mid-teens.
Moreover, management raised its earnings per share outlook for the current year. The company now anticipates 2023 earnings (on an adjusted basis) in the band of $6-$7 per share (earlier view: $6). DAL projects 2023 total revenues (adjusted) to increase in the 17-20% range from 2022 actuals.
Delta’s liquidity position is encouraging. The airline ended second-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. Even though fuel price has come down from the highs witnessed earlier, it still remains at an elevated level. Management expects fuel price per gallon (adjusted) in the $2.50-$2.70 range in the September quarter.
Zacks Rank
DAL currently carries Zacks Rank #3 (Hold).
Key Picks
Some better-ranked stocks for investors interested in the Zacks Transportation sector are GATX Corporation (GATX - Free Report) and Triton International Limited .
For third-quarter and 2023, GATX’s earnings are expected to register 36.6% and 14.3% growth, respectively, on a year-over-year basis.
Triton, which currently carries a Zacks Rank #2, is benefiting from its consistent efforts to reward shareholders through dividends and share repurchases.
Triton has an impressive liquidity position. Its current ratio (a measure of liquidity) was 3.83 at the end of second-quarter 2023. A current ratio of more than 1 often indicates that the company will be easily paying off its short-term obligations.
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Here's Why Investors Should Retain Delta Air (DAL) Stock Now
Delta Air Lines, Inc. (DAL - Free Report) is benefiting from its improved air-travel demand and solid liquidity. However, escalating fuel costs are worrisome.
Factors Favoring DAL
Improved air-travel demand, particularly on the domestic front, is aiding Delta. Owing to the positive, DAL reported better-than-expected earnings per share and revenues in second-quarter 2023. Third-quarter earnings are expected in the range of $2.2-$2.5 per share. Adjusted operating margin in the September quarter is suggested in mid-teens.
Moreover, management raised its earnings per share outlook for the current year. The company now anticipates 2023 earnings (on an adjusted basis) in the band of $6-$7 per share (earlier view: $6). DAL projects 2023 total revenues (adjusted) to increase in the 17-20% range from 2022 actuals.
Delta’s liquidity position is encouraging. The airline ended second-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. Even though fuel price has come down from the highs witnessed earlier, it still remains at an elevated level. Management expects fuel price per gallon (adjusted) in the $2.50-$2.70 range in the September quarter.
Zacks Rank
DAL currently carries Zacks Rank #3 (Hold).
Key Picks
Some better-ranked stocks for investors interested in the Zacks Transportation sector are GATX Corporation (GATX - Free Report) and Triton International Limited .
GATX, which presently carries a Zacks Rank #2 (Buy), has strengthened its railcar leasing operations. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
For third-quarter and 2023, GATX’s earnings are expected to register 36.6% and 14.3% growth, respectively, on a year-over-year basis.
Triton, which currently carries a Zacks Rank #2, is benefiting from its consistent efforts to reward shareholders through dividends and share repurchases.
Triton has an impressive liquidity position. Its current ratio (a measure of liquidity) was 3.83 at the end of second-quarter 2023. A current ratio of more than 1 often indicates that the company will be easily paying off its short-term obligations.