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Delta Air Lines (DAL) Rides on Air-Travel Demand, Costs Ail
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Delta Air Lines, Inc. (DAL - Free Report) is benefiting from improved air-travel demand, particularly on the domestic front. Driven by the uptick, Delta expects fourth-quarter 2022 operating margin to be 11%, i.e., at the top of the previously guided 9-11% range.
Total revenues are now likely to increase in the 7-8% range from fourth-quarter 2019 actuals (the earlier outlook was for an increase in the 5-9% range). Passenger revenues, which account for the bulk of the top line, are likely to have been high, boosting the top line.
Shares of Delta Airlines have gained 25.5% over the past six months, outperforming 13.4% growth of the industry it belongs to.
Image Source: Zacks Investment Research
On the flip side,escalating fuel costs pose a threat to Delta’s bottom line. Oil price is moving north primarily because of supply concerns due to Russia's invasion of Ukraine. In third-quarter 2022, the average fuel price per gallon (adjusted) increased 80% from third-quarter 2019 actuals to $3.53. In the first nine months of 2022, the metric increased 69% from the comparable period in 2019. Management expects fuel price per gallon in the $3.35-$3.55 range in the December quarter.
Due to higher staffing costs and low capacity, Delta’s non-fuel unit costs (up 11% in 2021) are increasing. In the first nine months of 2022, non-fuel unit costs increased 20% from the first nine months of 2019. In the December quarter, the metric is expected to increase in the 12-13% range from fourth-quarter 2019 actuals.
Zacks Rank and Stocks to Consider
Delta currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the broader Zacks Transportation sector are American Airlines (AAL - Free Report) ), Teekay Tankers Ltd. (TNK - Free Report) ) and Gol Linhas Aereas Inteligentes S.A.. American Airlines and Teekay Tankers sport a Zacks Rank #1 (Strong Buy), while Gol Linhas currently carries a Zacks Rank #2 (Buy).You can see the complete list of today’s Zacks #1 Rank stocks here.
AAL has an expected earnings growth rate of more than 100% for the current year. AAL delivered a trailing four-quarter earnings surprise of 8.62%, on average.
The Zacks Consensus Estimate for AAL’s current-year earnings has improved 19.3% over the past 90 days. Shares of AAL have gained 5.6% over the past six months.
Teekay Tankers has an expected earnings growth rate of 143.11% 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 more than 100% over the past 90 days. Shares of TNK have soared 67.9% over the past six months.
Gol Linhas has an expected earnings growth rate of 50.9% for the current year.
Shares of GOL have gained 6.4% over the past three months.
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Delta Air Lines (DAL) Rides on Air-Travel Demand, Costs Ail
Delta Air Lines, Inc. (DAL - Free Report) is benefiting from improved air-travel demand, particularly on the domestic front. Driven by the uptick, Delta expects fourth-quarter 2022 operating margin to be 11%, i.e., at the top of the previously guided 9-11% range.
Total revenues are now likely to increase in the 7-8% range from fourth-quarter 2019 actuals (the earlier outlook was for an increase in the 5-9% range). Passenger revenues, which account for the bulk of the top line, are likely to have been high, boosting the top line.
Shares of Delta Airlines have gained 25.5% over the past six months, outperforming 13.4% growth of the industry it belongs to.
Image Source: Zacks Investment Research
On the flip side,escalating fuel costs pose a threat to Delta’s bottom line. Oil price is moving north primarily because of supply concerns due to Russia's invasion of Ukraine. In third-quarter 2022, the average fuel price per gallon (adjusted) increased 80% from third-quarter 2019 actuals to $3.53. In the first nine months of 2022, the metric increased 69% from the comparable period in 2019. Management expects fuel price per gallon in the $3.35-$3.55 range in the December quarter.
Due to higher staffing costs and low capacity, Delta’s non-fuel unit costs (up 11% in 2021) are increasing. In the first nine months of 2022, non-fuel unit costs increased 20% from the first nine months of 2019. In the December quarter, the metric is expected to increase in the 12-13% range from fourth-quarter 2019 actuals.
Zacks Rank and Stocks to Consider
Delta currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the broader Zacks Transportation sector are American Airlines (AAL - Free Report) ), Teekay Tankers Ltd. (TNK - Free Report) ) and Gol Linhas Aereas Inteligentes S.A.. American Airlines and Teekay Tankers sport a Zacks Rank #1 (Strong Buy), while Gol Linhas currently carries a Zacks Rank #2 (Buy).You can see the complete list of today’s Zacks #1 Rank stocks here.
AAL has an expected earnings growth rate of more than 100% for the current year. AAL delivered a trailing four-quarter earnings surprise of 8.62%, on average.
The Zacks Consensus Estimate for AAL’s current-year earnings has improved 19.3% over the past 90 days. Shares of AAL have gained 5.6% over the past six months.
Teekay Tankers has an expected earnings growth rate of 143.11% 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 more than 100% over the past 90 days. Shares of TNK have soared 67.9% over the past six months.
Gol Linhas has an expected earnings growth rate of 50.9% for the current year.
Shares of GOL have gained 6.4% over the past three months.