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Delta (DAL) Ups Q4 EPS View on Buoyant Air-Travel Demand
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Delta Air Lines, Inc. (DAL - Free Report) ) is seeing a steady recovery in domestic and leisure air-travel demand. The recovery in business travel demand has also picked up pace. Notably, the relaxation of COVID-19 travel restrictions and reopening of the global economy has turned out to be a boon for airline stocks.
Given this buoyant air-travel demand, DAL has provided a bullish outlook for its fourth-quarter 2022 earnings. The company now anticipates fourth-quarter 2022 earnings per share in the $1.35 - $1.40 range (prior view: $1.00-$1.25). The Zacks Consensus Estimate of $1.14 lies below the updated guidance.
The operating margin is now anticipated to be 11% (prior view: 9-11%). Revenues are now expected to register 7-8% growth (prior view: 5-9% growth rate).
For 2022, Delta expects revenues in the range of $45.5-$45.6 billion. The Zacks Consensus Estimate of $48.53 billion lies above the guidance.
Adjusted earnings per share are expected to be between $3.07 and $3.12. The Zacks Consensus Estimate of $2.88 lies below the guidance.
The operating margin is expected to be 7.7%. Free cash flow is also expected to be positive.
Rosy Outlook Issued for 2023 & 2024
For 2023, Delta is hopeful of achieving solid top-line growth and operating leverage on the restoration of its network and continued improvements in premium and loyalty revenues. DAL expects to register revenue growth of 15-20% on a year-over-year basis.
Non-fuel unit costs are expected to decline 5-7%, which should boost margin expansion and double up the bottom line. Adjusted earnings per share for 2023 are expected to be between $5.00 and $6.00. The Zacks Consensus Estimate of $4.81 lies below the guidance. The operating margin is expected to be 10-12%. Further, DAL expects to generate more than $2 billion of free cash flow, enabling further debt reduction.
For 2024, adjusted earnings per share are expected to be more than $7.00. The operating margin is expected to be 13-15%. Further, DAL expects to generate more than $4 billion of free cash flow.
Some better-ranked stocks from the broader Zacks Transportation sector are United Airlines Holdings, Inc. (UAL - Free Report) , Ryder Systems (R - Free Report) and Teekay Tankers Ltd. (TNK - Free Report) , each currently carrying a Zacks Rank #2 (Buy).
UAL has an expected earnings growth rate of 115.64% for the current year. UAL delivered a trailing four-quarter earnings surprise of 7.78%, on average.
The Zacks Consensus Estimate for UAL’s current-year earnings has improved more than 100% over the past 90 days. Shares of UAL have gained 6.6% over the past year.
Ryder has an expected earnings growth rate of 67.12% for the current year. R delivered a trailing four-quarter earnings surprise of 30.13%, on average.
The Zacks Consensus Estimate for R’s current-year earnings has improved 6.9% over the past 90 days. Shares of R have gained 4.7% over the past year.
Teekay Tankers has an expected earnings growth rate of 214.91% for the current year. TNK delivered a trailing four-quarter earnings surprise of 42.23%, on average. Teekay Tankers has a long-term expected growth rate of 3%.
The Zacks Consensus Estimate for TNK’s current-year earnings has improved 95% over the past 90 days. Shares of TNK have soared 176.8% over the past year.
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Delta (DAL) Ups Q4 EPS View on Buoyant Air-Travel Demand
Delta Air Lines, Inc. (DAL - Free Report) ) is seeing a steady recovery in domestic and leisure air-travel demand. The recovery in business travel demand has also picked up pace. Notably, the relaxation of COVID-19 travel restrictions and reopening of the global economy has turned out to be a boon for airline stocks.
Given this buoyant air-travel demand, DAL has provided a bullish outlook for its fourth-quarter 2022 earnings. The company now anticipates fourth-quarter 2022 earnings per share in the $1.35 - $1.40 range (prior view: $1.00-$1.25). The Zacks Consensus Estimate of $1.14 lies below the updated guidance.
The operating margin is now anticipated to be 11% (prior view: 9-11%). Revenues are now expected to register 7-8% growth (prior view: 5-9% growth rate).
For 2022, Delta expects revenues in the range of $45.5-$45.6 billion. The Zacks Consensus Estimate of $48.53 billion lies above the guidance.
Adjusted earnings per share are expected to be between $3.07 and $3.12. The Zacks Consensus Estimate of $2.88 lies below the guidance.
The operating margin is expected to be 7.7%. Free cash flow is also expected to be positive.
Rosy Outlook Issued for 2023 & 2024
For 2023, Delta is hopeful of achieving solid top-line growth and operating leverage on the restoration of its network and continued improvements in premium and loyalty revenues. DAL expects to register revenue growth of 15-20% on a year-over-year basis.
Non-fuel unit costs are expected to decline 5-7%, which should boost margin expansion and double up the bottom line. Adjusted earnings per share for 2023 are expected to be between $5.00 and $6.00. The Zacks Consensus Estimate of $4.81 lies below the guidance. The operating margin is expected to be 10-12%. Further, DAL expects to generate more than $2 billion of free cash flow, enabling further debt reduction.
For 2024, adjusted earnings per share are expected to be more than $7.00. The operating margin is expected to be 13-15%. Further, DAL expects to generate more than $4 billion of free cash flow.
Zacks Rank and Stocks to Consider
Currently, Delta Airlines carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Some better-ranked stocks from the broader Zacks Transportation sector are United Airlines Holdings, Inc. (UAL - Free Report) , Ryder Systems (R - Free Report) and Teekay Tankers Ltd. (TNK - Free Report) , each currently carrying a Zacks Rank #2 (Buy).
UAL has an expected earnings growth rate of 115.64% for the current year. UAL delivered a trailing four-quarter earnings surprise of 7.78%, on average.
The Zacks Consensus Estimate for UAL’s current-year earnings has improved more than 100% over the past 90 days. Shares of UAL have gained 6.6% over the past year.
Ryder has an expected earnings growth rate of 67.12% for the current year. R delivered a trailing four-quarter earnings surprise of 30.13%, on average.
The Zacks Consensus Estimate for R’s current-year earnings has improved 6.9% over the past 90 days. Shares of R have gained 4.7% over the past year.
Teekay Tankers has an expected earnings growth rate of 214.91% for the current year. TNK delivered a trailing four-quarter earnings surprise of 42.23%, on average. Teekay Tankers has a long-term expected growth rate of 3%.
The Zacks Consensus Estimate for TNK’s current-year earnings has improved 95% over the past 90 days. Shares of TNK have soared 176.8% over the past year.