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DAL has a mixed earnings surprise history, having surpassed the Zacks Consensus Estimate in two of the preceding four quarters (missing the mark on other two occasions), the average beat being 2.12%. The Zacks Consensus Estimate for third-quarter 2023 earnings has been revised 16.95% downward over the last 60 days.
Given this backdrop, lets examine the factors likely to have influenced Delta’s performance in the to-be-reported quarter.
We expect high fuel costs to have dented DAL’s bottom-line performance in the September quarter. With oil price moving north, fuel cost per gallon is likely to have been high. For third-quarter 2023, Delta now anticipates average fuel cost per gallon in the $2.75-$2.90 band (prior view: $2.50-$2.70). Our estimate is pegged at $2.88 per gallon.
Additionally, DAL is burdened with expenses related to non-fuel unit costs. Non-fuel unit cost or cost per available seat mile (CASM: adjusted) for the September quarter is now expected to increase 1-2% (earlier estimate was a 1-3% decline) from third-quarter 2022 actuals. The uptick is due to higher-than-expected maintenance costs. Our estimate hints at a 1.3% increase from third-quarter 2022 actuals.
Due to high costs, management recently trimmed its third-quarter projections for adjusted operating margin and adjusted earnings per share. Operating margin (on an adjusted basis) is predicted to be around 13% (prior view: mid-teens). DAL now projects third-quarter 2023 adjusted earnings in the range of $1.85-$2.05 per share (prior view: $2.20-$2.50). The Zacks Consensus Estimate for third-quarter earnings is pegged at $1.96 currently.
For third-quarter 2023, the carrier envisions capacity to improve 16% from the year-ago quarter. Buoyant air-travel demand is likely to have boosted the top line in the quarter under review. We expect passenger revenues in third-quarter 2023 to jump 8.9% from the prior-year quarter.
What Our Model Says
Our proven model does not conclusively predict an earnings beat for Delta Air Lines this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. This is not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Delta Air Lines has an Earnings ESP of -2.61% (the Most Accurate Estimate is currently pegged at $1.96 per share, 5 cents below the Zacks Consensus Estimate) and a Zacks Rank #4 (Sell).
Q2 Highlights
Delta’s second-quarter 2023 earnings (excluding 16 cents from non-recurring items) of $2.68 per share comfortably beat the Zacks Consensus Estimate of $2.42. DAL had reported earnings of $1.44 a year ago as air-travel demand was not so buoyant back then.
Revenues of $15,578 million beat the Zacks Consensus Estimate of $14,991.6 million. Total revenues gained 12.69% on a year-over-year basis on the back of higher air-travel demand.
Stocks to Consider
Here are a few stocks from the broader Zacks Transportation sector that investors may consider, as our model shows that these have the right combination of elements to beat on their third-quarter 2023 earnings.
ODFL is scheduled to report third-quarter 2023 earnings on Oct 25. The Zacks Consensus Estimate for earnings has been revised 2.91% upward over the last 60 days. ODFL has an impressive earnings surprise history, having surpassed the Zacks Consensus Estimate in three of the preceding four quarters (missing the mark on the other occasion), the average beat being 3.86%.
Kirby Corporation (KEX - Free Report) has an Earnings ESP of +6.52% and a Zacks Rank #3. KEX is slated to report third-quarter 2023 earnings on Oct 26.
The Zacks Consensus Estimate for third-quarter 2023 earnings has remained flat over the last seven days. KEX has a stellar earnings surprise history, having outshined the Zacks Consensus Estimate in each of the preceding four quarters by an average of 8.03%.
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Delta (DAL) Q3 Earnings Likely to Disappoint: Here's Why
Delta Air Lines (DAL - Free Report) is scheduled to report third-quarter 2023 results on Oct 12, before market open.
DAL has a mixed earnings surprise history, having surpassed the Zacks Consensus Estimate in two of the preceding four quarters (missing the mark on other two occasions), the average beat being 2.12%. The Zacks Consensus Estimate for third-quarter 2023 earnings has been revised 16.95% downward over the last 60 days.
Delta Air Lines, Inc. Price and EPS Surprise
Delta Air Lines, Inc. price-eps-surprise | Delta Air Lines, Inc. Quote
Given this backdrop, lets examine the factors likely to have influenced Delta’s performance in the to-be-reported quarter.
We expect high fuel costs to have dented DAL’s bottom-line performance in the September quarter. With oil price moving north, fuel cost per gallon is likely to have been high. For third-quarter 2023, Delta now anticipates average fuel cost per gallon in the $2.75-$2.90 band (prior view: $2.50-$2.70). Our estimate is pegged at $2.88 per gallon.
Additionally, DAL is burdened with expenses related to non-fuel unit costs. Non-fuel unit cost or cost per available seat mile (CASM: adjusted) for the September quarter is now expected to increase 1-2% (earlier estimate was a 1-3% decline) from third-quarter 2022 actuals. The uptick is due to higher-than-expected maintenance costs. Our estimate hints at a 1.3% increase from third-quarter 2022 actuals.
Due to high costs, management recently trimmed its third-quarter projections for adjusted operating margin and adjusted earnings per share. Operating margin (on an adjusted basis) is predicted to be around 13% (prior view: mid-teens). DAL now projects third-quarter 2023 adjusted earnings in the range of $1.85-$2.05 per share (prior view: $2.20-$2.50). The Zacks Consensus Estimate for third-quarter earnings is pegged at $1.96 currently.
For third-quarter 2023, the carrier envisions capacity to improve 16% from the year-ago quarter. Buoyant air-travel demand is likely to have boosted the top line in the quarter under review. We expect passenger revenues in third-quarter 2023 to jump 8.9% from the prior-year quarter.
What Our Model Says
Our proven model does not conclusively predict an earnings beat for Delta Air Lines this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. This is not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Delta Air Lines has an Earnings ESP of -2.61% (the Most Accurate Estimate is currently pegged at $1.96 per share, 5 cents below the Zacks Consensus Estimate) and a Zacks Rank #4 (Sell).
Q2 Highlights
Delta’s second-quarter 2023 earnings (excluding 16 cents from non-recurring items) of $2.68 per share comfortably beat the Zacks Consensus Estimate of $2.42. DAL had reported earnings of $1.44 a year ago as air-travel demand was not so buoyant back then.
Revenues of $15,578 million beat the Zacks Consensus Estimate of $14,991.6 million. Total revenues gained 12.69% on a year-over-year basis on the back of higher air-travel demand.
Stocks to Consider
Here are a few stocks from the broader Zacks Transportation sector that investors may consider, as our model shows that these have the right combination of elements to beat on their third-quarter 2023 earnings.
Old Dominion Freight Line (ODFL - Free Report) has an Earnings ESP of +1.41% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
ODFL is scheduled to report third-quarter 2023 earnings on Oct 25. The Zacks Consensus Estimate for earnings has been revised 2.91% upward over the last 60 days. ODFL has an impressive earnings surprise history, having surpassed the Zacks Consensus Estimate in three of the preceding four quarters (missing the mark on the other occasion), the average beat being 3.86%.
Kirby Corporation (KEX - Free Report) has an Earnings ESP of +6.52% and a Zacks Rank #3. KEX is slated to report third-quarter 2023 earnings on Oct 26.
The Zacks Consensus Estimate for third-quarter 2023 earnings has remained flat over the last seven days. KEX has a stellar earnings surprise history, having outshined the Zacks Consensus Estimate in each of the preceding four quarters by an average of 8.03%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.