Is Delta Air Lines Stock a Buy?

"Is Delta Air Lines stock a buy?" is a question frequently asked by investors. Delta Air Lines is one of the world's largest airlines, and its stock has been relatively volatile in recent months. The company has benefited from a strong recovery in air travel, and its financial results have been impressive. Recently, Delta projected earnings per share of $2 to $2.25, beating analyst expectations by over 10%. Revenue has also increased by around 10% year-over-year. 

So, is Delta Air Lines a good stock a buy? The answer may be yes, with its strong financial results and bright future. But before you buy Delta Air Lines stock, there are a few things to consider. Let's take a few minutes to review Delta Airlines' stock comprehensively.

Overview of Delta Air Lines 

Delta Air Lines NYSE: DAL is a major American airline headquartered in Atlanta, Georgia. It is the second largest airline in the United States by fleet size, the third largest by scheduled passenger miles flown and the largest by number of destinations served. Delta operates a global network serving over 300 destinations in 50 countries on six continents. Delta Air Lines is among the few blue-chip stocks in the aerospace division.

The company was founded in 1925 as Huff Daland Dusters, an aerial crop dusting operation. In 1929, the company began passenger service under Delta Air Service. Delta proliferated in the 1930s and 1940s, and by the end of World War II, it was one of the largest airlines in the United States.

In the 1950s and 1960s, Delta continued to grow and expand its network. The company also became a pioneer in the use of jet aircraft. In 1961, Delta was the first airline to fly the Douglas DC-8 jetliner.

In the 1970s and 1980s, Delta faced increasing competition from other airlines. The company responded by merging with several smaller airlines, including Northeast Airlines and Western Airlines. Delta also began to expand its international network.

In the 1990s, Delta continued to grow and expand. The company also began finding new technology to invest in, including developing its reservation system.

In the 2000s, Delta faced many challenges, including the September 11 terrorist attacks and the 2008 financial crisis. However, the company emerged from these challenges stronger than ever. In 2008, Delta acquired Northwest Airlines, which made it the largest airline in the United States by fleet size.

In the 2010s, Delta continued to grow and expand. The company also began to invest in new aircraft, including the Airbus A350 and the Boeing 787 Dreamliner.

Today, Delta Air Lines is one of the most successful airlines in the world. The company is known for its excellent customer service and its commitment to safety. Delta is also a leader in environmental sustainability. The company has set a goal of reducing its carbon emissions by 50% by 2050. 

Latest Delta Air Lines Stock News 

Reviewing the latest headlines is important as we continue our journey to discover if investors should buy Delta stock. Delta Air Lines has recently reported strong financial results, surpassing analyst expectations in multiple quarters. The company's earnings have exceeded projections, driven by factors such as the ongoing recovery in air travel, the addition of new routes and the implementation of innovative pricing strategies. Alongside its impressive financial performance, Delta has made strategic moves, including an upcoming acquisition and investments in new aircraft, setting the stage for continued growth.

Delta Air Lines has been posting strong earnings surpassing analyst estimates. The strong performance was attributed to the recovering air travel industry, expanded route offerings and effective pricing strategies. These factors combined to drive robust growth and position Delta favorably among its competitors.

Delta Air Lines continued its positive trajectory in the fourth quarter of 2022, reporting earnings of $1.30 per share, surpassing analyst expectations. Additionally, year-over-year revenue saw a healthy increase of around 10%. The sustained demand for air travel, ongoing route expansion and successful pricing strategies contributed to Delta's impressive performance. The company's strong showing in consecutive quarters reflects its ability to navigate market challenges effectively.

In the first quarter of 2023, Delta Air Lines reported adjusted earnings of $0.25 per share, but expectations were thirty cents, disappointing investors. The negative results were due to multiple factors, one of which Delta Air Lines stated was their new four-year pilot contract that included 34% wage increases. 

According to Delta Airlines' most recent earnings call, it should report earnings between $2 and $2.25 per share in the current quarter, aligning with analyst expectations. The company should witness a year-over-year revenue increase of around 15%. Delta is poised to benefit from sustained strong demand for air travel, ongoing route expansion and successful pricing strategies. These factors should contribute to the company's solid performance in the current quarter.

Delta Air Lines has been making strategic moves to solidify its market position further. In October 2022, the company announced a joint venture with LATAM Airlines Group. The venture is expected to begin servicing the Brazilian market in early 2023. 

Delta is also actively investing in its fleet by ordering 155 Airbus A321neo aircraft and 59 Airbus A220-300 aircraft in 2022. The delivery of these new aircraft is slated for mid-2023 and 2024. These investments highlight Delta's commitment to modernizing its fleet, enhancing operational efficiency and providing an exceptional travel experience for customers.

Share Performance 

Review previous share performance to answer the question, "Should I buy Delta stock?". Delta Airlines' stock performance over the past year has been notable, with a year-to-date increase of around 20%. The stock's upward trajectory can be attributed to several factors positively impacting the company's financial performance and market sentiment.

First and foremost, the continued recovery in air travel has played a significant role in Delta's stock performance. As the aviation industry rebounds from the challenges posed by the COVID-19 pandemic, increased passenger demand has improved revenue and profitability for Delta Airlines. This recovery has been driven by factors such as easing travel restrictions, growing consumer confidence and pent-up demand for leisure and business travel.

Delta's proactive approach to expanding its route network has also contributed to its stock's success. The company has effectively captured market opportunities and expanded its customer base by adding new routes. These strategic route expansions have increased Delta's revenue streams and enhanced its competitive position in key markets.

Implementing new pricing strategies has further bolstered Delta Airlines' financial and stock performance. By optimizing pricing structures and leveraging data analytics, Delta has been able to maximize revenue per passenger and improve overall profitability. These pricing strategies have enabled the company to adapt to changing market dynamics and optimize its offerings to cater to diverse customer segments.

Delta Airlines' substantial investments in new aircraft have also resonated positively with investors. The order of 155 Airbus A321neo and 59 Airbus A220 aircraft demonstrates the company's commitment to fleet modernization, operational efficiency and improved customer experience. These investments should enhance Delta's competitive advantage, reduce fuel costs and position the airline for long-term success.

Delta Air Lines remains well-positioned for continued growth with a strong financial position, a robust network and a commitment to innovation. The combination of favorable market conditions, strategic initiatives and a focus on meeting evolving customer needs has propelled the company's stock performance, instilling confidence among investors in Delta's potential for future success.

Balance Sheet

Delta Airlines' balance sheet provides a comprehensive overview of the company's financial position as of December 31, 2022. The balance sheet showcases the company's assets, liabilities and equity, offering insights into its financial health and resources.

Delta Air Lines reported total assets of $72.29 billion, representing the company's holdings and investment value. The most significant asset category is its aircraft, valued at $34.8 billion. This highlights the importance of the airline's fleet in its operations. Other notable assets include cash and cash equivalents ($5.5 billion), accounts receivable ($10.9 billion) and property and equipment ($11.2 billion), which encompasses various tangible assets owned by the company.

The company reported total liabilities of $65.71 billion, reflecting the company's outstanding obligations and debts. The largest liability category is accounts payable, with a value of $11.5 billion. This represents the amounts owed to suppliers and vendors. Other significant liabilities include accrued expenses ($6.7 billion), long-term debt ($20.2 billion) and deferred revenue ($10.2 billion), which represents payments received for services not yet provided.

Delta Air Lines' equity is reported at $8.2 billion, representing the portion of the company's value attributable to its shareholders. It represents the cumulative investments made by the shareholders of the business. The equity amount considers factors such as retained earnings and additional shareholder contributions.

Its balance sheet demonstrates a healthy financial position. The company's asset base is substantial, with a strong focus on aircraft as a significant asset category. This reflects the core operating assets required for its business model. The liabilities are within a manageable range, indicating that the company has a reasonable level of debt and obligations. The shareholders' equity of $8.2 billion signifies the ownership stake in the company and represents the residual value after deducting liabilities from total assets.

A robust balance sheet is crucial for an airline like Delta Air Lines, as it provides a solid foundation to support its operations, growth and financial stability. The balance sheet snapshot offers valuable insights for investors, creditors and stakeholders to assess the company's financial health and ability to meet its obligations and pursue future opportunities.

Valuation

Delta Air Lines' valuation is an essential indicator of investor sentiment and reflects the market's perception of the company's worth. We can gain a comprehensive overview of Delta Airlines' valuation by analyzing key data points and considering market trends.

Delta Air Lines' market capitalization is $22.78 billion. You can calculate market capitalization by multiplying the company's stock price by its outstanding shares. This figure represents the total value the market assigns to the company.

We consider the earnings per share (EPS) figure to assess valuation further. Delta Air Lines reported an EPS of 25 cents, an increase of 120.33% over the same quarter a year before. EPS represents the company's profitability per outstanding share and is a crucial metric in determining valuation.

Calculate the price-to-earnings (P/E) ratio by dividing the market capitalization by the EPS. Delta Air Lines's most recently calculated P/E ratio stands at 7.25. The P/E ratio compares a company's stock price to earnings, providing insights into how much investors are willing to pay for each dollar.

A high P/E ratio suggests that investors have a positive outlook on the company's growth prospects, as they are willing to pay a premium for the stock. Conversely, a low P/E ratio may indicate lower investor confidence in the company's future performance. The airline industry currently has a P/E ratio of 7.69, slightly higher than Delta's P/E ratio, putting Delta in line with industry peers. 

Various factors influence a company's valuation, including financial performance, growth prospects and competitive position. Delta Air Lines' valuation is likely affected by these factors and broader market conditions.

Delta Air Lines' valuation appears reasonable. The company has a strong financial position and positive growth prospects, as evidenced by its market capitalization and earnings performance. Delta Air Lines is considered a growth stock because it has a history of above-average earnings and revenue growth. 

Opportunities and Disadvantages of Delta Air Lines Stock 

Delta Air Lines is a large and well-established airline with a strong track record compared to other airline industry stocks. The company has several opportunities for growth, including expanding into new markets, acquiring new aircraft and developing new technology. 

However, the company faces challenges, including high fuel costs, rising competition and economic downturns. Let's take a moment to review Delta's opportunities and disadvantages in detail, and don't forget to check out Delta's stock chart on MarketBeat. 

Opportunities

According to the FAA's Aerospace Forcast, the global air travel market should grow at a compound annual growth rate (CAGR) of 4.5% from 2022 to 2030. Several factors, including rising incomes, increasing urbanization and the growth of the middle class in developing countries, drive this growth. Delta Air Lines is well-positioned to benefit from this growth, as it has a strong network and a reputation for excellent customer service.

Delta Air Lines is expanding its network into new markets, including Asia, Latin America and Africa. This expansion will allow the company to reach new customers and grow its revenue.

Delta Air Lines is acquiring new, more fuel-efficient aircraft with a longer range than older aircraft, which will allow Delta Air Lines to reduce its costs and expand its network. It also continues to develop new technology, such as self-service check-in and in-flight Wi-Fi. This technology will make travel easier for customers and improve their experience.

It has also increased its focus on customer service. The company continues investing in new employee training programs and ways to improve the customer experience.

Disadvantages

The cost of fuel is a significant expense for airlines. Delta Air Lines is working to reduce its fuel costs by using more fuel-efficient aircraft and negotiating better fuel prices. However, the company is still vulnerable to oil price changes.

The airline industry is highly competitive. Delta Air Lines faces competition from other major airlines, such as American, United and Southwest. The company also faces competition from low-cost carriers like Spirit and Frontier. 

An economic downturn can harm the airline industry. Delta Air Lines is considered a consumer discretionary stock versus a consumer staples stock, and each type acts differently in economic downturn situations. Being discretionary means that people with less money are less likely to travel or spend on discretionary items, which can lead to a decrease in demand for air travel and a decline in airline revenue.

Natural disasters, such as hurricanes and earthquakes, can disrupt air travel. When flights are canceled or delayed, it can inconvenience passengers and lead to a loss of revenue for airlines.

The airline industry is a target for terrorism. Security threats can lead to increased security measures, increasing airline costs. They also cause flight cancellations and delays, which can inconvenience passengers and lead to a loss of revenue for airlines.

The company must continue managing its costs and risks to maintain its success.

Outlook for Delta Airlines

Based on the current stock metrics and Delta Air Lines's future projections, the company should maintain a positive trajectory and perform well. The company's strong financial position, robust network and commitment to innovation contribute to its promising outlook. 

Delta's strategic initiatives further contribute to its positive future outlook. The company is actively expanding into new markets, including Asia, Latin America and Africa, allowing it to tap into previously untapped customer bases and drive revenue growth. Moreover, Delta Air Lines is acquiring new aircraft with longer ranges and reduced operating costs compared to older aircraft models. This fleet modernization enables Delta to enhance operational efficiency, expand its reach and capture new market opportunities.

Delta Air Lines invests in developing cutting-edge technologies in line with its commitment to innovation. Initiatives like self-service check-in and in-flight Wi-Fi aim to improve customers' overall travel experience, making their journeys more convenient and enjoyable. By staying at the forefront of technological advancements, Delta aims to strengthen customer loyalty and satisfaction, further driving its growth.

The company emphasizes customer service, recognizing its significance in the highly competitive airline industry. The company is investing in new employee training programs and implementing measures to enhance the customer experience. By prioritizing exceptional service, Delta aims to differentiate itself from competitors and foster long-term customer loyalty.

The company's future outlook appears positive, considering Delta's strong financial position, robust network, commitment to innovation and anticipated global air travel market growth. 

Is Delta Air Lines Stock a Buy? 

The answer to the question, "Is Delta a good stock to buy?" depends on your investment strategy. Delta Air Lines is a large, well-established airline with a strong track record. The company has several opportunities for growth, including expanding into new markets, acquiring new aircraft and developing new technology. 

However, the company faces challenges, including high fuel costs, rising competition and economic downturns.

Delta Air Lines is a well-positioned blue-chip company with a bright future. The company has a solid financial position, a robust network and a commitment to innovation. 

Whether or not Delta Air Lines is a "buy" depends on your investment goals and risk tolerance. Delta Air Lines may be a good option if you want a stock with a strong financial position and a bright future. However, if you are concerned about the risks of the airline industry, then consider other investments. There are many other excellent consumer discretionary stocks on the market. You can compare Delta against other blue-chip stocks to see how Delta's metrics stack up. 

FAQs 

This FAQ section addresses some commonly asked questions about Delta's operations and future outlook. Whether you're a potential investor, a frequent flyer or simply curious about the company, this section aims to provide you with valuable information and insights. 

Is Delta stock a good buy right now? 

So is DAL a buy now? Whether this blue-chip stock is a good investment depends on your investment goals and risk tolerance. If you are looking for a stock with a solid financial position and a bright future, Delta may work for your portfolio. However, if you are concerned about the risks of the airline industry, then consider other investments.

Will Delta Airlines' stock go up?

It is impossible to say whether or not Delta Airlines' stock will increase. The stock market is volatile and can be affected by various factors, both internal and external to the company. However, the DAL stock forecast shows that it is a well-established company with a strong track record, so the stock could go up in the future.

Is Delta stock undervalued?

Whether or not Delta stock is undervalued is a matter of opinion. Some investors may believe the stock is undervalued, while others may think it is fairly valued. Ultimately, answering the question "Is Delta stock a buy?" is up to each investor to decide whether or not they believe the stock is at the correct valuation to purchase.