Delta Air Lines is the IBD Stock Of The Day for Wednesday. Delta Air Lines expects strong growth in 2023 as the travel market recovery continues. DAL stock climbed Wednesday above a buy point as traders digested the day's news from the Federal Reserve.
Despite some harsh weather and technology disruptions during the holiday season, airline travel rebounded in 2022. That momentum is expected to carry into 2023. The World Economic Forum predicts North American airlines will fully recover their pre-pandemic ridership levels by the end of the year.
"The industry backdrop for air travel remains favorable, and Delta is well-positioned to deliver significant earnings and cash-flow growth," Delta CEO Ed Bastian said during the company's Q4 earnings results on Jan. 13.
For the quarter, Delta Air Lines' earnings soared 573% to $1.48 per share and revenue surged 42% to $13.44 billion. That handily beat Wall Street estimates for earnings per share of $1.32 on 36% revenue growth to $12.92 billion. The results marked three quarters of earnings growth and four straight quarters of sales growth.
For fiscal 2023, Delta forecasts "significant" earnings growth to $5 to $6 per share, from $3.20 in 2022. Revenue is seen rising 15% to 20%, to a range of $52.44 billion to $54.72 billion. FactSet analysts expect 64% earnings growth to $5.26 per share on $53.49 billion in revenue.
However, Delta also tempered expectations, projecting non-fuel-unit costs and labor costs would increase during the first quarter. Delta guided Q1 earnings to a range of 15 cents to 40 cents per share, vs. Wall Street predictions of 59 cents.
Still, Delta stock is up 21% so far in 2023.
American Airlines and United Airlines also are big recent winners. Shares of Southwest Airlines, which had a massive computer malfunction that grounded thousands of flights in December, rose modestly in January. LUV stock is stuck below key moving averages.
Delta Stock
Delta Air Lines ranks second in the Transportation-Airline group, according to the IBD Stock Checkup, trailing only Panama City-based Copa Holdings.
DAL stock broke out from a tight handle for its cup-with-handle base on Wednesday, rising 2% to 39.89. The current 40-week pattern has a 39.72 buy point, according to MarketSmith. The cup with handle's buy zone, which extends 5% beyond the buy point, stretches to 41.70.
Delta's relative strength line has fallen off its mid-January highs, and shares currently hold a 81 RS Rating. The airline's improving earnings grant Delta stock an 82 EPS Rating. And the stock has a 97 Composite Rating out of a best-possible 99. The Composite Rating combines a number of technical indicators into one easy-to-read score.
On Wednesday, DAL stock was added to the SwingTrader list of short-term trades. Delta stock rose 2% higher on Wednesday.
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