Delta Air Lines Inc. (NYSE: DAL) is scheduled to report its first-quarter financial results before the markets open on Thursday. The consensus estimates call for $1.29 in earnings per share (EPS) on revenue of $9.27 billion. In the same period of the previous year, the company posted EPS of $0.45 and $9.39 billion in revenue.
Despite the improved bottom line, however, a number of the major airline stocks have been down of late. Factors such as a reduction in customer revenue per available seat mile, increasing labor costs and heated competition are all weighing on investor sentiment this quarter, and improved bottom lines are proving insufficient to boost valuation.
This isn’t necessarily a bad thing, however. Rarely do we see such a divergence between net income and market capitalization, and this could offer an opportunity to get in at a discount ahead of valuation realignment. Take Delta and Alaska Air Group Inc. (NYSE: ALK), for example. Both are down double-digit percentage points on last year’s highs. With this said, which airlines look the most attractive at current rates?
At last count, Delta came out on top from a market value perspective, followed by Southwest Airlines Co. (NYSE: LUV) and American Airlines Group, Inc. (NASDAQ: AAL). Looking at price-to-earnings (P/E) ratios, however, the story is a little different. Trailing P/E puts American ahead, with a ratio of 3.47, versus the 8.27 of Delta and the 13.64 of Southwest.
Prior to the release of the earnings report, a few analysts weighed in on Delta stock:
- JPMorgan reiterated an Overweight rating with a $66 price target.
- Credit Suisse has an Outperform rating but lowered its price target to $59 from $61.
- Deutsche Bank reiterated a Hold rating with a $55 price target.
So far in 2016, Delta has underperformed the market, with the stock down about 5%. However, over the past 52 weeks the stock is up over 10%.
Shares of Delta were trading up 2.4% at $47.77 midday Wednesday, with a consensus analyst price target of $64.07 and a 52-week trading range of $34.61 to $52.77.
Get Ready To Retire (Sponsored)
Start by taking a quick retirement quiz from SmartAsset that will match you with up to 3 financial advisors that serve your area and beyond in 5 minutes, or less.
Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests.
Here’s how it works:
1. Answer SmartAsset advisor match quiz
2. Review your pre-screened matches at your leisure. Check out the advisors’ profiles.
3. Speak with advisors at no cost to you. Have an introductory call on the phone or introduction in person and choose whom to work with in the future
Get started right here.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Latest from 24/7
