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.
Here's Why Investors Should Hold on to Delta Air Lines Stock Now
Read MoreHide Full Article
Delta Air Lines’ (DAL - Free Report) top line is benefiting from strong air travel demand. The airline’s proactive measures to expand and upgrade its fleet are praiseworthy. However, DAL has been grappling with weak liquidity and increased operating expenses.
Factors Favoring Delta
Delta Air Lines’ top line is bolstered by upbeat passenger volumes due to the buoyant air travel demand scenario. In the second quarter of 2024, the airline increased its capacity, measured in available seat miles, by 8% year over year. For the September quarter of 2024, management projects capacity growth of 5% to 6% and revenue growth of 2% to 4%. Corporate travel demand surged, with recent surveys showing that 90% of companies anticipate their travel volumes will either increase or remain steady in the September quarter and beyond.
DAL's efforts to expand and upgrade its network and fleet are commendable. In the June quarter, the airline delivered 11 new aircraft, including the A321neo, A220-300 and A350-900, bringing the total for the year to 18. In the June quarter of 2024, Delta announced a strategic partnership with Riyadh Air, which will enhance connectivity and premium travel options between North America, Saudi Arabia and beyond, including future service between the United States and King Khalid International Airport in Riyadh.
The airline implemented its largest-ever international summer schedule, with more than 1,700 weekly flights to 80 destinations. Delta introduced Delta Premium Select on select JFK-LAX flights starting in September. The expansion continued with Delta launching a new route from Seattle to Taipei in June, and adding two new routes between Florida and Europe in October—Tampa to Amsterdam and Orlando to London. Delta also resumed the daily nonstop service to Tel Aviv from JFK.
Delta’s commitment to rewarding its shareholders via dividends and buybacks is encouraging. In the first half of 2024, the airline announced a 50 percent increase in its quarterly dividend, beginning in the September quarter of 2024. This was the first dividend increase announced by DAL since its resumption of quarterly dividend payments last year following the COVID-19-induced hiatus. The new quarterly dividend has become 15 cents per share (annualized 60 cents per share).
Shares of Delta Air Lines have rallied 4.3% over the past six months compared with its industry’s 1.2% growth.
Image Source: Zacks Investment Research
Delta Air Lines: Key Risks to Watch
High operating expenses are adversely impacting Delta Air Lines’ bottom line. This surge in operating expenses is driven by the increase in labor costs.
In the second quarter of 2024, labor costs, comprising salaries and benefits (accounting for 29% of the total operating expenses), rose by 10% year over year to $4 billion in the second quarter of 2024. Fuel costs remained high.
Delta Air Lines exited the second quarter of 2024 with a current ratio (a measure of liquidity) of 0.40, raising liquidity concerns. A current ratio of less than 1 indicates that the company does not have enough cash to meet its short-term obligations.
Zacks Rank
DAL currently carries a Zacks Rank #3 (Hold).
Stocks to Consider
Some better-ranked stocks for investors’ consideration in the Zacks Transportation sector include C.H. Robinson Worldwide (CHRW - Free Report) and Westinghouse Air Brake Technologies (WAB - Free Report) .
The company has an impressive earnings surprise history. Its earnings outpaced the Zacks Consensus Estimate in three of the trailing four quarters and missed once, delivering an average surprise of 7.3%. Shares of CHRW have risen 14.2% in the past year.
WAB carries a Zacks Rank #2 (Buy) at present and has an expected earnings growth rate of 26% for the current year.
The company has a discouraging track record with respect to the earnings surprise, having surpassed the Zacks Consensus Estimate in three of the trailing four quarters. The average beat is 11.8%. Shares of WAB have climbed 57.4% in the past year.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Shutterstock
Here's Why Investors Should Hold on to Delta Air Lines Stock Now
Delta Air Lines’ (DAL - Free Report) top line is benefiting from strong air travel demand. The airline’s proactive measures to expand and upgrade its fleet are praiseworthy. However, DAL has been grappling with weak liquidity and increased operating expenses.
Factors Favoring Delta
Delta Air Lines’ top line is bolstered by upbeat passenger volumes due to the buoyant air travel demand scenario. In the second quarter of 2024, the airline increased its capacity, measured in available seat miles, by 8% year over year. For the September quarter of 2024, management projects capacity growth of 5% to 6% and revenue growth of 2% to 4%. Corporate travel demand surged, with recent surveys showing that 90% of companies anticipate their travel volumes will either increase or remain steady in the September quarter and beyond.
DAL's efforts to expand and upgrade its network and fleet are commendable. In the June quarter, the airline delivered 11 new aircraft, including the A321neo, A220-300 and A350-900, bringing the total for the year to 18. In the June quarter of 2024, Delta announced a strategic partnership with Riyadh Air, which will enhance connectivity and premium travel options between North America, Saudi Arabia and beyond, including future service between the United States and King Khalid International Airport in Riyadh.
The airline implemented its largest-ever international summer schedule, with more than 1,700 weekly flights to 80 destinations. Delta introduced Delta Premium Select on select JFK-LAX flights starting in September. The expansion continued with Delta launching a new route from Seattle to Taipei in June, and adding two new routes between Florida and Europe in October—Tampa to Amsterdam and Orlando to London. Delta also resumed the daily nonstop service to Tel Aviv from JFK.
Delta’s commitment to rewarding its shareholders via dividends and buybacks is encouraging. In the first half of 2024, the airline announced a 50 percent increase in its quarterly dividend, beginning in the September quarter of 2024. This was the first dividend increase announced by DAL since its resumption of quarterly dividend payments last year following the COVID-19-induced hiatus. The new quarterly dividend has become 15 cents per share (annualized 60 cents per share).
Shares of Delta Air Lines have rallied 4.3% over the past six months compared with its industry’s 1.2% growth.
Image Source: Zacks Investment Research
Delta Air Lines: Key Risks to Watch
High operating expenses are adversely impacting Delta Air Lines’ bottom line. This surge in operating expenses is driven by the increase in labor costs.
In the second quarter of 2024, labor costs, comprising salaries and benefits (accounting for 29% of the total operating expenses), rose by 10% year over year to $4 billion in the second quarter of 2024. Fuel costs remained high.
Delta Air Lines exited the second quarter of 2024 with a current ratio (a measure of liquidity) of 0.40, raising liquidity concerns. A current ratio of less than 1 indicates that the company does not have enough cash to meet its short-term obligations.
Zacks Rank
DAL currently carries a Zacks Rank #3 (Hold).
Stocks to Consider
Some better-ranked stocks for investors’ consideration in the Zacks Transportation sector include C.H. Robinson Worldwide (CHRW - Free Report) and Westinghouse Air Brake Technologies (WAB - Free Report) .
C.H. Robinson Worldwide currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here. CHRW has an expected earnings growth rate of 25.2% for the current year.
The company has an impressive earnings surprise history. Its earnings outpaced the Zacks Consensus Estimate in three of the trailing four quarters and missed once, delivering an average surprise of 7.3%. Shares of CHRW have risen 14.2% in the past year.
WAB carries a Zacks Rank #2 (Buy) at present and has an expected earnings growth rate of 26% for the current year.
The company has a discouraging track record with respect to the earnings surprise, having surpassed the Zacks Consensus Estimate in three of the trailing four quarters. The average beat is 11.8%. Shares of WAB have climbed 57.4% in the past year.