What to Look for in Delta Air Earnings

By Chris Lange Updated Jan 13, 10:49AM EST · Published Apr 13, 12:05PM EDT

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What to Look for in Delta Air Earnings — © Thinkstock

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.

About the Author Chris Lange →

Chris Lange is a writer for 24/7 Wall St., based in Houston. He has covered financial markets over the past decade with an emphasis on healthcare, tech, and IPOs. During this time, he has published thousands of articles with insightful analysis across these complex fields. Currently, Lange's focus is on military and geopolitical topics.

Lange's work has been quoted or mentioned in Forbes, The New York Times, Business Insider, USA Today, MSN, Yahoo, The Verge, Vice, The Intelligencer, Quartz, Nasdaq, The Motley Fool, Fox Business, International Business Times, The Street, Seeking Alpha, Barron’s, Benzinga, and many other major publications.

A graduate of Southwestern University in Georgetown, Texas, Lange majored in business with a particular focus on investments. He has previous experience in the banking industry and startups.