Should Investors Snatch Up Share of Delta Air Lines (DAL) This Week?

Delta Air Lines, Inc. (DAL) has recently unveiled plans to increase its number of flights to China, a strategic move aimed at capitalizing on the ongoing recovery in travel demand. Given the pent-up demand for air travel and an expected rebound in profitability, DAL may present a promising investment opportunity this week.

The International Air Transport Association (IATA) has revised its 2023 outlook, predicting the airline industry’s net profits will hit $9.8 billion this year, more than double the previous estimate of $4.7 billion from December 2022.

This enhanced profitability forecast is underpinned by factors including China lifting COVID-19 restrictions earlier than anticipated, cargo revenues remaining above pre-pandemic levels, and moderating jet fuel prices.

Strong bookings this summer have led DAL to report record revenue and profitability for the June quarter. Also, the airline operator has raised its 2023 earnings guidance while maintaining its projection of generating $3 billion in free cash flow.

To provide a comprehensive overview of DAL’s prospects, delving more deeply into the company’s key financial metrics trends is vital.

Delta Air Lines Inc’s Financial Journey: Transformation and Growth (2020 - 2023)

The trailing-12-month net income of DAL experienced significant fluctuations from 2020 to 2023.

• At the end of the third quarter of 2020, the net income plunged to -$10.53 billion and continued to dwindle throughout 2020, reaching its lowest point at -$12.38 billion by the end of December.
• In the first quarter of 2021, DAL’s net income slightly dropped to -$13.02 billion. However, the second quarter saw an improvement, with the net income climbing to -$6.66 billion, marking the start of a steady recovery.
• By the end of September 2021, the net income had significantly recovered to -$68 million. By the end of December 2021, the company recorded a positive net income of $280 million for the first time in over a year.
• This upward trend continued into 2022, with profits rising steadily from $516 million in the first quarter to $599 million in the second quarter. A minor dip occurred in the third quarter with a net income of $82 million but quickly bounced back to $1.31 billion by the end of December.
• The growth trend persisted into 2023, rising from $1.89 billion in the first quarter to $2.98 billion in the second quarter.

Comparing the first value (-$10.53 billion) to the last value ($2.98 billion), DAL’s net income has remarkably grown by approximately 128% within this period.

DAL experienced a varying trend in its trailing-12-month revenue from the third quarter of 2020 until the second quarter of 2023.

• In September 2020, the company reported $24.56 billion in revenue.
• At the end of the year, December 2020, the revenue significantly decreased to $17.1 billion.
• There was a consistent decline in the first quarter of 2021, with $12.65 billion recorded in March.
• In June 2021, a slight recovery was observed when the revenue increased to $18.31 billion, but it was still lower than the 2020 figures.
• The following quarter, September 2021, experienced a notable surge, with the revenue nearly returning to the previous year’s level at $24.4 billion.
• There was continuous and noticeable growth in the next three quarters, reaching $29.9 billion in December 2021, $35.1 billion in March 2022, and $41.80 billion in June 2022.
• The increasing trend continued over the next two quarters, reaching a peak of $50.58 billion in revenue by the end of 2022.
• The upward trajectory stretched into 2023, with revenue reaching $53.99 billion in March and $55.75 billion by June of that year.

The data indicates a growth rate of approximately 127% from the first value ($24.56 billion in September 2020) to the last value ($55.75 billion in June 2023). The significant fluctuations in the early stages recording a decline gradually gave way to steady growth in more recent periods, with the most notable increase occurring towards the end of 2022, which continued into 2023. Therefore, it can be inferred that despite some fluctuation, there is a generally positive trend in DAL’s performance based on this series of revenue data.

The Return on Assets (ROA) of DAL has demonstrated a fluctuating trend from September 30, 2020, to June 30, 2023. Here are some key points in the data:

• Delta saw a continuous negative ROA from September 30, 2020 (-0.148 or -14.8%) through March 31, 2021 (-0.176 or -17.6%). This trend reached its lowest point in the first quarter of 2021.
• Smooth recovery began in the second quarter of 2021 with an upsurge of ROA to -0.089 by June 30, 2021, and continued to improve in the subsequent quarters, hitting a near-zero value by September 30, 2021 (-0.001 or -0.1%).
• From December 31, 2021, the ROA turned positive and has been rising slightly every quarter. By December 31, 2022, DAL recorded an ROA of 0.018 (1.8%).
• The most recent data shows that by the end of the second quarter in 2023, DAL’s ROA had further increased to 0.041 (4.1%).

Taken as a whole, the growth rate of DAL’s ROA, which measures the final value from the initial value, shows an increase from -0.148 in September 2020 to 0.041 in June 2023, marking a significant recovery.

The trend and fluctuations of DAL Analyst Price Target from November 12, 2021, to August 24, 2023, can be summarized as follows:

• The Price Target started at $54 on November 12, 2021, and saw a minor increase to $54.5 by November 26, 2021. This value remained steady till mid-December 2021.
• After that, a decrement happened, bringing down the Price Target to $52 by the end of December 2021. The beginning of 2022 saw further decreases, with the Price Target dipping to $50 by February 18. This value then remained steady till mid-April 2022.
• A brief rise to $53.5 was seen by the end of April 2022, which remained constant until June 2022.
• Another decrement happened mid-year, where the Price Target came to $49.25 by end of July 2022 and continued to decrease slowly over the third quarter of 2022, reaching $48.5 in November.
• Little fluctuation was evident between late 2022 and early 2023, keeping the Price Target around this range.
• After minor ups and downs between February to April 2023, the Price Target dipped to $48.5 by April’s end and remained consistent for two months.
• From June end 2023 onward, a sharp increase is observable. The Price Target rose to $50.7 in the last week of June 2023.
• This ascending trend continued, with the Price Target volunteering a remarkable leap to $55 in the second week of July 2023.
• With further enhancement, this trend peaked on August 24, 2023, scoring a Price Target of $60.

Overall, from the initial $54 in November 2021 to $60 by August 2023, the DAL Price Target growth rate is approximately 11%. Emphasis on the latest data indicates an upward trend at present. The Price Target stands at $60 on August 24, 2023, noting a steady increment from the start of July 2023.

Delta Air Lines Stock Performance Analysis: A Volatile Growth Journey, March-August 2023

Reviewing the provided data from DAL, a distinct share price trend emerges from March to August 2023. Here is a general overview:

• As of March 3, 2023, the share price was $38.36.
• It shows a slight increase on March 10, 2023, with a value of $38.86.
• The share price then declined for the rest of March, reaching a low of $32.86 by March 24.
• The share price steadily increased from April through mid-June, culminating at $41.73 on June 16.
• It continued to rise, peaking at $48.03 on July 21.
• However, the price started a downward trend in late July and August, closing at $42.20 on August 23.

To summarize, DAL’s shares showed an accelerating growth rate from April to July but had started decelerating by late July. This trend persisted into August 2023. Overall, the data suggests volatility in share prices over the months studied, with a general trend toward growth that appears to falter later in this timeframe. Here is a chart of DAL’s price over the past 180 days.

Analyzing Delta Air Lines’ Growth, Quality, and Momentum Trends in 2023

DAL has an overall B rating, translating to a Buy in our POWR Ratings system. It is ranked # among the 28 stocks in the Airlines category.

The data sheds light on DAL’s continuously strong trading performance and advancing status within the competitive Airlines category of stocks.

Looking at the POWR Ratings for DAL, the three dimensions that stand out the most, in terms of high ratings and clear trends, are Growth, Quality, and Momentum.

Growth: Growth has consistently maintained high ratings over the period. Starting with a value of 95 in February 2023, it saw a minor uptick to 96 in March 2023. After that, the value dipped slightly in the subsequent months, hitting a low of 81 by August 2023.

Quality: The quality dimension exhibited steady improvement throughout the period. It started from a fair value of 62 in February 2023. By the end of August 2023, the rating for Quality had risen to 74, marking a significant step up.

Momentum: In terms of momentum, DAL demonstrated a remarkable upward trend. From the starting point of 32 in February 2023, the value had more than doubled to 67 in August 2023. This shows a robust increase in momentum over six months.

From the data, it can be inferred that while the growth dimension has seen a slight downward trend, the quality and momentum dimensions trends were clearly upward over these months for DAL. Despite the decrease in Growth, it still maintains a robust value, making these three categories the prime contributors to DAL’s overall ranking.

How does Delta Air Lines Inc. (DAL) Stack Up Against its Peers?

Other stocks in the Airlines sector that may be worth considering are Cathay Pacific Airways Limited (CPCAY), Air Canada (ACDVF), and Air France-KLM SA (AFLYY) -- they have better POWR Ratings.

What To Do Next?

Discover 10 widely held stocks that our proprietary model shows have tremendous downside potential. Please make sure none of these “death trap” stocks are lurking in your portfolio:

10 Stocks to SELL NOW! >

DAL shares fell $0.01 (-0.02%) in premarket trading Thursday. Year-to-date, DAL has gained 28.69%, versus a 16.72% rise in the benchmark S&P 500 index during the same period.

Subhasree’s keen interest in financial instruments led her to pursue a career as an investment analyst. After earning a Master’s degree in Economics, she gained knowledge of equity research and portfolio management at Finlatics.

More...