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Why Is Delta (DAL) Down 2% Since Last Earnings Report?
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It has been about a month since the last earnings report for Delta Air Lines (DAL - Free Report) . Shares have lost about 2% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Delta due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Narrower-Than-Expected Loss in Q2
Delta incurred loss (excluding $2.09 from non-recurring items) of $1.07 per share was narrower than the Zacks Consensus Estimate of a loss of $1.41 as well as the second-quarter 2020 loss of $4.43. This was the sixth successive quarterly loss incurred by the company.
Despite the recent uptick in air-travel demand (particularly for leisure) in the United States as more and more Americans get vaccinated, the picture remains bleak when compared to the second-quarter 2019. Consequently, passenger revenues plunged 53% from the levels recorded in the comparable quarter of 2019 to $5,339 million. Meanwhile, the improvement in air-travel demand in the United States can be gauged from the fact that 83.9% of the second-quarter 2021 passenger revenues came from domestic markets.
Cargo revenues increased 35% to $251 million while revenues from other sources climbed 56% to $1,536 million. Due to the passenger revenue weakness, total revenues in the June quarter tanked 43% to $7,126 million from the second-quarter 2019 level. Revenues were, however, substantially higher than the year-ago levels, buoyed by the recent uptick in air-travel demand. The metric also topped the Zacks Consensus Estimate of $6,340.9 million.
Reflecting the improving booking trends, the average daily net cash sales (tickets purchased less tickets refunded) at Delta were 70% restored in June compared with the 2019 levels. In the month of June, Delta achieved pre-tax profit.
Other Financial Details of Q2
Below we present all comparisons (in % terms) to second-quarter 2019 (pre-coronavirus levels).
Revenue passenger miles (a measure of air traffic) tumbled 47% to 33,285 million. With Delta making significant capacity cuts to match the coronavirus-induced sharp decrease in traffic, capacity (measured in available seat miles) contracted 32% to 48,529 million. With the fall in traffic outpacing the capacity reduction, load factor (percentage of seats filled by passengers) was down to 69% from 88% in the comparable quarter of 2019.
Passenger revenue per available seat mile (PRASM) too took a 31% dive to merely 11 cents. Passenger mile yield decreased to 16.04 cents from 18 cents in the second quarter of 2019. On an adjusted basis, total revenue per available seat mile (TRASM) in the June quarter deteriorated 25% to 13.08 cents.
Total operating expenses including special items declined 39% to $6,310 million. Expenses on aircraft fuel and related taxes slumped 35% in the reported quarter. With most of the fleet remaining grounded/under-utilized, fuel gallons consumed decreased 37% to $690 million. Average fuel price per gallon (adjusted) climbed 2% to $2.12. Non-fuel unit cost increased 9% in the reported quarter.
The airline had liquidity worth $17.8 billion at the end of the June quarter (including cash and cash equivalents, short-term investments and undrawn revolving credit facilities). The company had total debt and finance lease obligations of $29.1 billion with adjusted net debt of $18.3 billion. Inclusive of the benefit from the Payroll Support Programs, cash generated from operations during the reported quarter was $1.9 billion. The company generated free cash flow (adjusted) to the tune of $195 million in the June quarter.
Q3 Outlook
Notably, all comparisons in percentage are made to third-quarter 2019. For the third quarter of 2021, the carrier expects capacity to decline in the 28-30% band from the number reported in third-quarter 2019. The carrier anticipates total revenues to drop in the 30-35% range from third-quarter 2019 actuals. Non-fuel unit costs in third-quarter 2021 are expected to increase in the 11-15% band from the third-quarter 2019 actuals.
Fuel price per gallon in the September quarter is projected in the $2.05-$2.15 range. Capital expenditures and adjusted net debt are likely to be around $800 million and $19 billion, respectively, in the September quarter.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision. The consensus estimate has shifted 99.96% due to these changes.
VGM Scores
Currently, Delta has a great Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Delta has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Delta (DAL) Down 2% Since Last Earnings Report?
It has been about a month since the last earnings report for Delta Air Lines (DAL - Free Report) . Shares have lost about 2% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Delta due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Narrower-Than-Expected Loss in Q2
Delta incurred loss (excluding $2.09 from non-recurring items) of $1.07 per share was narrower than the Zacks Consensus Estimate of a loss of $1.41 as well as the second-quarter 2020 loss of $4.43. This was the sixth successive quarterly loss incurred by the company.
Despite the recent uptick in air-travel demand (particularly for leisure) in the United States as more and more Americans get vaccinated, the picture remains bleak when compared to the second-quarter 2019. Consequently, passenger revenues plunged 53% from the levels recorded in the comparable quarter of 2019 to $5,339 million. Meanwhile, the improvement in air-travel demand in the United States can be gauged from the fact that 83.9% of the second-quarter 2021 passenger revenues came from domestic markets.
Cargo revenues increased 35% to $251 million while revenues from other sources climbed 56% to $1,536 million. Due to the passenger revenue weakness, total revenues in the June quarter tanked 43% to $7,126 million from the second-quarter 2019 level. Revenues were, however, substantially higher than the year-ago levels, buoyed by the recent uptick in air-travel demand. The metric also topped the Zacks Consensus Estimate of $6,340.9 million.
Reflecting the improving booking trends, the average daily net cash sales (tickets purchased less tickets refunded) at Delta were 70% restored in June compared with the 2019 levels. In the month of June, Delta achieved pre-tax profit.
Other Financial Details of Q2
Below we present all comparisons (in % terms) to second-quarter 2019 (pre-coronavirus levels).
Revenue passenger miles (a measure of air traffic) tumbled 47% to 33,285 million. With Delta making significant capacity cuts to match the coronavirus-induced sharp decrease in traffic, capacity (measured in available seat miles) contracted 32% to 48,529 million. With the fall in traffic outpacing the capacity reduction, load factor (percentage of seats filled by passengers) was down to 69% from 88% in the comparable quarter of 2019.
Passenger revenue per available seat mile (PRASM) too took a 31% dive to merely 11 cents. Passenger mile yield decreased to 16.04 cents from 18 cents in the second quarter of 2019. On an adjusted basis, total revenue per available seat mile (TRASM) in the June quarter deteriorated 25% to 13.08 cents.
Total operating expenses including special items declined 39% to $6,310 million. Expenses on aircraft fuel and related taxes slumped 35% in the reported quarter. With most of the fleet remaining grounded/under-utilized, fuel gallons consumed decreased 37% to $690 million. Average fuel price per gallon (adjusted) climbed 2% to $2.12. Non-fuel unit cost increased 9% in the reported quarter.
The airline had liquidity worth $17.8 billion at the end of the June quarter (including cash and cash equivalents, short-term investments and undrawn revolving credit facilities). The company had total debt and finance lease obligations of $29.1 billion with adjusted net debt of $18.3 billion. Inclusive of the benefit from the Payroll Support Programs, cash generated from operations during the reported quarter was $1.9 billion. The company generated free cash flow (adjusted) to the tune of $195 million in the June quarter.
Q3 Outlook
Notably, all comparisons in percentage are made to third-quarter 2019. For the third quarter of 2021, the carrier expects capacity to decline in the 28-30% band from the number reported in third-quarter 2019. The carrier anticipates total revenues to drop in the 30-35% range from third-quarter 2019 actuals. Non-fuel unit costs in third-quarter 2021 are expected to increase in the 11-15% band from the third-quarter 2019 actuals.
Fuel price per gallon in the September quarter is projected in the $2.05-$2.15 range. Capital expenditures and adjusted net debt are likely to be around $800 million and $19 billion, respectively, in the September quarter.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision. The consensus estimate has shifted 99.96% due to these changes.
VGM Scores
Currently, Delta has a great Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Delta has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.