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Atlanta, Georgia-based Delta Air Lines, Inc. (DAL) provides scheduled air transportation for passengers and cargo. With a market cap of $30.3 billion, the global airline leader offers flight status information, bookings, baggage handling, and other related services.
Companies worth $10 billion or more are generally described as “large-cap stocks,” and DAL perfectly fits that description, with its market cap exceeding this mark, underscoring its size, influence, and dominance within the airline industry.
Delta Air Lines' operational reliability is key to its success. This commitment has earned DAL prestigious awards and recognition. The airline's profit-sharing program aligns employee’s interests with the company's success. With a fleet of 1,273 aircraft, DAL offers over 4,000 daily flights globally.
Despite its notable strength, DAL has slipped 12.5% from its 52-week high of $53.86, achieved on May 13. Over the past three months, DAL stock has declined 4.9%, underperforming the S&P 500 Index’s ($SPX) 4.1% gains during the same time frame.
In the longer term, shares of DAL rose 17.2% on a YTD basis and climbed 19.5% over the past 52 weeks, underperforming SPX’s YTD gains of 19.8% and solid 28.6% returns over the last year.
However, DAL has been trading above its 50-day and 200-day moving averages recently, indicating a bullish trend.
DAL is facing challenges with weak liquidity and increased operating expenses, primarily driven by high labor costs. In Q2, labor and fuel costs remained high, affecting the airline's financial performance. Flight delays and cancellations due to a CrowdStrike software update also impacted revenue and earnings. The industry's cyclicality with rapid capacity expansion and subsequent profit slumps as demand fluctuates is a concern for investors.
On Jul. 11, DAL shares closed down more than 3% after reporting its Q2 earnings results. Its adjusted EPS of $2.36 did not meet Wall Street expectations of $2.37, but is revenue of $16.7 billion topped Wall Street forecasts of $16.3 billion.
DAL’s top rival, Southwest Airlines Co. (LUV), has lagged behind the stock, with a marginal uptick on a YTD basis and marginal gains over the past 52 weeks.
Wall Street analysts are highly bullish on DAL’s prospects. The stock has a consensus “Strong Buy” rating from the 19 analysts covering it, and the mean price target of $60.29 suggests a potential upside of 27.9% from current price levels.
On the date of publication, Neha Panjwani did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
