S&P 500   3,852.36
DOW   32,920.46
QQQ   306.18
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S&P 500   3,852.36
DOW   32,920.46
QQQ   306.18
Europe bans Russian diesel, other oil products over Ukraine
Cash Holders STILL Aren't Taking Steps to Prepare (Ad)
Route to Super Bowl dangerous for Mexico's avocado haulers
Biden's State of the Union to tout policy wins on economy
Cash Holders STILL Aren't Taking Steps to Prepare (Ad)
Is C3.ai Artificial Intelligence Product Suite a Gamechanger?
It wasn’t me: Ex-UK PM Truss blames 'system' for her failure
Cash Holders STILL Aren't Taking Steps to Prepare (Ad)
How will EU ban and West's price cap on Russian diesel work?
Evacuations urged in Ohio town as train wreck smolders
S&P 500   3,852.36
DOW   32,920.46
QQQ   306.18
Europe bans Russian diesel, other oil products over Ukraine
Cash Holders STILL Aren't Taking Steps to Prepare (Ad)
Route to Super Bowl dangerous for Mexico's avocado haulers
Biden's State of the Union to tout policy wins on economy
Cash Holders STILL Aren't Taking Steps to Prepare (Ad)
Is C3.ai Artificial Intelligence Product Suite a Gamechanger?
It wasn’t me: Ex-UK PM Truss blames 'system' for her failure
Cash Holders STILL Aren't Taking Steps to Prepare (Ad)
How will EU ban and West's price cap on Russian diesel work?
Evacuations urged in Ohio town as train wreck smolders
S&P 500   3,852.36
DOW   32,920.46
QQQ   306.18
Europe bans Russian diesel, other oil products over Ukraine
Cash Holders STILL Aren't Taking Steps to Prepare (Ad)
Route to Super Bowl dangerous for Mexico's avocado haulers
Biden's State of the Union to tout policy wins on economy
Cash Holders STILL Aren't Taking Steps to Prepare (Ad)
Is C3.ai Artificial Intelligence Product Suite a Gamechanger?
It wasn’t me: Ex-UK PM Truss blames 'system' for her failure
Cash Holders STILL Aren't Taking Steps to Prepare (Ad)
How will EU ban and West's price cap on Russian diesel work?
Evacuations urged in Ohio town as train wreck smolders

Delta Air Lines Looks Ready To Take Off

Key Points

  • Delta is one the best performing of the airline majors in recent weeks. 
  • Shares are continuing to consolidate after a multi-month sell-off.
  • There’s a strong case for a recovery rally to start picking up pace. 
  • 5 stocks we like better than Delta Air Lines
Delta Air Lines Looks Ready To Take Off
A 4% jump in Delta’s (NYSE: DAL) shares on a day when the S&P 500 index sank to fresh lows is a good indication of what they might do over the next few months. The catalyst for the move higher was the company’s Q3 earnings report, which was released just before the bell rang to start Thursday’s session. Revenue was up a solid 53% on the year and ahead of the consensus, while bottom line earnings were marginally short of the $1.53 analysts were expecting. All in all, positive headline numbers. 

But the deeper you went into the report, the better it got. Delta is now forecasting EPS for Q4 to be between $1 to $1.25, well ahead of the consensus for $0.80. Given the tough 18 months their shares have logged, there’s a growing argument that we could be on the verge of a major recovery rally. Since their post-pandemic move higher ran out of steam back in March of last year, shares have trended lower some 45%. Though still well above the lows of May 2020, this consistent lack of demand for shares is at odds with the overall bounce back in air traffic numbers. There’s only one real culprit to point the finger at here, inflation.

Squeezed On Both Sides

Like with pretty much every other industry and stock out there, inflation has made its presence felt in the past year, and not in a good way. For airlines specifically, it squeezes them from both sides. Falling discretionary spending by consumers means less demand for vacation flights, while the rising interest rates being brought in to fight inflation mean higher borrowing costs for the business. With this context, it’s understandable that the bears have been in control. But it’s also fair to at least wonder if we might be going through the worst of it right now. Many analysts expect inflation to peak in the first half of next year, so you have to think that the worst-case scenario is just about priced into shares or is close to it.


Any upside surprise, be it macroeconomic or company-specific like with the fresh forecast for Q4’s EPS, could act as a spark to dry tinder. Indeed, Glen Hauenstein, Delta’s president, struck a bullish tone in this regard with yesterday’s report. He told investors that "we reached a major milestone this quarter, with adjusted revenue 3 percent higher and unit revenues up 23 percent compared to 2019, marking the highest revenue and unit revenue quarter in Delta's history. Our results reflect the strength of our brand and diverse revenue streams, with another quarter of record co-brand remuneration and continued premium product outperformance. With corporate travel improving and robust domestic and international demand, we expect December quarter revenue to be up 5 to 9 percent compared to December quarter 2019."

Getting Involved

Yet for all that, Delta shares are still only trading at 2013 levels. From a technical perspective, however, it’s looking like they’re trying to put in a low around the $29-30 mark. Save for a few intra-day transgressions, this level has been strongly defended since March of this year and there’s a decent line of support for tempted investors to start working some entries around. 

These same investors will appreciate how Delta is performing against its peers as well. Of all the majors, including United Airlines (NASDAQ: UAL), American Airlines (NASDAQ: AAL), and Southwest Airlines (NYSE: LUV), Delta has traded the strongest over the past 12 weeks. While still down 4% from where it started in August, the others are down 6%, 9% and 15% respectively. There’s sure to be some more turbulence yet for airline shares this year, and Delta will be no exception. But its shares look more likely to go higher from here than lower, and if you’re an optimist when it comes to inflation, it could be time to start backing up the truck.

Should you invest $1,000 in Delta Air Lines right now?

Before you consider Delta Air Lines, you'll want to hear this.

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Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
Delta Air Lines (DAL)
2.7766 of 5 stars
$39.58-0.8%N/A19.40Buy$49.44
American Airlines Group (AAL)
1.927 of 5 stars
$17.02-0.2%N/A-1,702.00Hold$17.53
Southwest Airlines (LUV)
3.1488 of 5 stars
$36.35-1.3%1.98%45.44Moderate Buy$48.71
Delta Air Lines (DAL)
2.7766 of 5 stars
$39.58-0.8%N/A19.40Buy$49.44
Compare These Stocks  Add These Stocks to My Watchlist 

Sam Quirke

About Sam Quirke

Contributing Author: Technical Analysis

After graduating with a degree in finance, Sam worked for a trading technology company as an analyst before joining a prop firm. Here he traded energy, commodity and index futures while utilizing a combination of technical and fundamental analysis. Today he manages his own stock and option portfolio which is made up of longer term positions and shorter term momentum plays. He lives in Chicago.
Contact Sam Quirke via email at s.quirke.us@gmail.com.

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