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DAL has a good earnings surprise history, having surpassed the Zacks Consensus Estimate in three of the preceding four quarters (missing once), the average beat being 4.35%. The Zacks Consensus Estimate for fourth-quarter 2023 earnings has moved 5.6% downward over the last 90 days.
Given this backdrop, let’s examine the factors that are 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. With oil price moving north, fuel cost per gallon is likely to have been high. Delta anticipates average fuel cost per gallon in the $2.90-$3.20 band, and our estimate for the same is pegged at $3.03.
Additionally, DAL is burdened with expenses related to non-fuel unit costs. Non-fuel unit cost or cost per available seat mile (CASM: adjusted) is to be either flat or increase up to 2% from fourth-quarter 2022 level. High labor costs are leading to the uptick. Our estimate hints at a 1.9% increase from the fourth-quarter 2022 actuals.
However, buoyant air-travel demand is likely to have boosted the top line in the quarter under review. We expect passenger revenues to jump 6% from the prior-year quarter. To meet the robust demand scenario, Delta is expanding capacity. We expect capacity to improve 14.5% from a year ago
What Our Model Says
Our proven model does not conclusively predict an earnings beat for Delta 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 has an Earnings ESP of -1.88% (the Most Accurate Estimate is currently pegged at $1.16 per share, 2 cents below the Zacks Consensus Estimate) and a Zacks Rank #3 at present.
Q3 Highlights
Delta reported third-quarter 2023 earnings (excluding 31 cents from non-recurring items) of $2.03 per share, which comfortably beat the Zacks Consensus Estimate of $1.92 and improved 35% on a year-over-year basis. Revenues of $15,488 million beat the Zacks Consensus Estimate of $15,290.4 million and increased 11% on a year-over-year basis driven by higher air-travel demand. Adjusted operating revenues (excluding third-party refinery sales) came in at $14,553 million, up 13% year over year.
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 fourth-quarter 2023 earnings.
ODFL is scheduled to report fourth-quarter 2023 earnings on Jan 31. The Zacks Consensus Estimate for earnings has been revised 0.7% 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 once), the average beat being 3.14%.
Ryder System (R - Free Report) has an Earnings ESP of +2.00% and a Zacks Rank #3 at present. R is scheduled to report fourth-quarter 2023 earnings on Feb 14.
Ryder has an impressive earnings surprise history, having surpassed the Zacks Consensus Estimate in three of the preceding four quarters (missing once), the average beat being 7.62%.
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Delta (DAL) Q4 Earnings Likely to Disappoint: Here's Why
Delta Air Lines (DAL - Free Report) is scheduled to report fourth-quarter 2023 results on Jan 12, before market open.
DAL has a good earnings surprise history, having surpassed the Zacks Consensus Estimate in three of the preceding four quarters (missing once), the average beat being 4.35%. The Zacks Consensus Estimate for fourth-quarter 2023 earnings has moved 5.6% downward over the last 90 days.
Given this backdrop, let’s examine the factors that are 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. With oil price moving north, fuel cost per gallon is likely to have been high. Delta anticipates average fuel cost per gallon in the $2.90-$3.20 band, and our estimate for the same is pegged at $3.03.
Additionally, DAL is burdened with expenses related to non-fuel unit costs. Non-fuel unit cost or cost per available seat mile (CASM: adjusted) is to be either flat or increase up to 2% from fourth-quarter 2022 level. High labor costs are leading to the uptick. Our estimate hints at a 1.9% increase from the fourth-quarter 2022 actuals.
However, buoyant air-travel demand is likely to have boosted the top line in the quarter under review. We expect passenger revenues to jump 6% from the prior-year quarter. To meet the robust demand scenario, Delta is expanding capacity. We expect capacity to improve 14.5% from a year ago
What Our Model Says
Our proven model does not conclusively predict an earnings beat for Delta 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 has an Earnings ESP of -1.88% (the Most Accurate Estimate is currently pegged at $1.16 per share, 2 cents below the Zacks Consensus Estimate) and a Zacks Rank #3 at present.
Q3 Highlights
Delta reported third-quarter 2023 earnings (excluding 31 cents from non-recurring items) of $2.03 per share, which comfortably beat the Zacks Consensus Estimate of $1.92 and improved 35% on a year-over-year basis. Revenues of $15,488 million beat the Zacks Consensus Estimate of $15,290.4 million and increased 11% on a year-over-year basis driven by higher air-travel demand. Adjusted operating revenues (excluding third-party refinery sales) came in at $14,553 million, up 13% year over year.
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 fourth-quarter 2023 earnings.
Old Dominion Freight Line (ODFL - Free Report) has an Earnings ESP of +0.30% and a Zacks Rank #3 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
ODFL is scheduled to report fourth-quarter 2023 earnings on Jan 31. The Zacks Consensus Estimate for earnings has been revised 0.7% 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 once), the average beat being 3.14%.
Ryder System (R - Free Report) has an Earnings ESP of +2.00% and a Zacks Rank #3 at present. R is scheduled to report fourth-quarter 2023 earnings on Feb 14.
Ryder has an impressive earnings surprise history, having surpassed the Zacks Consensus Estimate in three of the preceding four quarters (missing once), the average beat being 7.62%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.