Delta Air Lines (DAL) stock is down more than 5% in early trading Thursday after the airline company satisfied analysts’ expectations for its second quarter but provided a soft outlook on the third quarter.
In the three months ended June 30, Delta’s operating revenue increased 6.9% year-over-year to $16.7 billion while its revenue per available seat mile decreased 1.2% to 22.3 cents. Its earnings per share (EPS) decreased 11.9% to $2.36 from the year-ago period.
“Thanks to the incredible work of our 100,000 people, Delta is delivering industry-leading operational performance and best-in-class service for our customers,” Delta CEO Ed Bastian said in a statement. “We delivered record June quarter revenue and pre-tax income of $2 billion with a 15% operating margin.”
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
The results satisfied analysts’ expectations. According to CNBC, Wall Street was anticipating revenue of $15.45 billion and earnings of $2.36 per share.
However, sentiment turned negative toward Delta after the company provided the outlook for its third quarter, which fell short of analysts’ expectations. Delta anticipates total revenue growth in the range of 2% to 4% and earnings per share in the range of $1.70 to $2.00, which came up short of analysts’ expectations of $2.05 per share.
"For the September quarter, we expect a double-digit operating margin and a pre-tax profit of approximately $1.5 billion,” Bastian said. “With strong first half results and visibility into the second half, we remain confident in our full-year guidance."
For the full year, Delta reiterated its guidance of earnings per share in the range of $6 to $7 and free cash flow of $3 billion to $4 billion.
Is Delta stock a buy, sell or hold?
Wall Street is bullish on the airline stock. According to S&P Global Market Intelligence, the average analyst target price for DAL stock is $60.58, representing implied upside of more than 36% to current levels. Additionally, the consensus recommendation is a Strong Buy.
"Delta is a well-run airline with industry leading operations, consistent pre-tax earnings pre-pandemic, and a focus on staying capacity disciplined,” BofA Securities analyst Andrew Didora said in a July 8 note.
“DAL's free cash flow potential the next few years (targets >$2B in 2023 and >$4B in 2024) is the most differentiating factor between DAL and other airlines (LUV and UAL). DAL expects to return to more normalized capex of $5-5.5B per year. This spend is similar to 2018-2019 while other airlines are investing at least twice the levels as pre-pandemic."
BofA Securities rates DAL stock a Buy.
Related Content
-
A 'Fast, Fair and Friendly' Fail: Farmers Irks Customers With Its Handling of a Data BreachFarmers Insurance is facing negative attention and lawsuits because of a three-month delay in notifying 1.1 million policyholders about a data breach. Here's what you can do if you're affected.
-
Serving the HNW Market: How Financial Advisers Can Break Through and Deliver Lasting ValueFinancial advisers have a significant opportunity to serve high-net-worth clients by elevating their capabilities, delivering comprehensive planning, building diverse teams and prioritizing family wealth education.
-
A 'Fast, Fair and Friendly' Fail: Farmers Irks Customers With Its Handling of a Data Breach
Farmers Insurance is facing negative attention and lawsuits because of a three-month delay in notifying 1.1 million policyholders about a data breach. Here's what you can do if you're affected.
-
Serving the HNW Market: How Financial Advisers Can Break Through and Deliver Lasting Value
Financial advisers have a significant opportunity to serve high-net-worth clients by elevating their capabilities, delivering comprehensive planning, building diverse teams and prioritizing family wealth education.
-
Don't Just Sell, Connect: How Financial Advisers Can Ignite Their Sales GrowthAvoid complacency and embrace small, consistent improvements to optimize your sales process and results.
-
Dow Adds 587 Points as Stocks Bounce: Stock Market TodayThe main indexes rebounded sharply Monday after President Trump took a calmer stance toward China.
-
Are You a Small Business Owner Buckling Under Economic Pressure? Here's How You Can CopeSignificant emotional and financial challenges, including tariff worries, are piling up on small business leaders. Here's how leaders can develop more healthy coping strategies and systems of support.
-
To Raise Prices or Not to Raise Prices: Tariff Tips for Small BusinessesSmall businesses are making critical decisions. Should they pass on higher costs due to tariffs, or would that only cost them more in lost customers?
-
Five Retirement Planning Traps You Can't Afford to Fall Into, From a Wealth AdviserTo help ensure you reach your savings goals and enjoy financial security in your golden years, be aware of these common pitfalls. The key is to be proactive, informed and flexible.
-
Your 401(k) Can Now Include Alternative Assets, But Should It? A Financial Adviser Weighs InMany employer-sponsored plans offer limited investment options, which can stunt growth. But participants considering alternatives might need some sound advice to get the most from their accounts.
