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Should Value Investors Consider Delta Air Lines (DAL) Stock?
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Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Delta Air Lines, Inc. (DAL - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Delta Air Lines has a trailing twelve months PE ratio of 9.95, as you can see in the chart below:
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 compares in at about 20.09. If we focus on the stock’s long-term PE trend, the current level puts Delta Air Lines’ current PE ratio marginally above its midpoint (which is 9.85) over the past five years.
Further, the stock’s PE also compares favorably with the industry’s trailing twelve months PE ratio, which stands at 10.18. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that Delta Air Lines has a forward PE ratio (price relative to this year’s earnings) of just 9.01, so it is fair to say that a slightly more value-oriented path may be ahead for Delta Air Lines stock in the near term too.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Delta Air Lines has a P/S ratio of about 0.90. This is significantly lower than the S&P 500 average, which comes in at 3.24 right now. Also, as we can see in the chart below, this is slightly below the highs for this stock in particular over the past few years.
If anything, this suggests some level of undervalued trading—at least compared to historical norms.
Broad Value Outlook
In aggregate, Delta Air Lines currently has a Value Style Score of ‘A’, putting it into the top 20% of all stocks we cover from this look. This makes DAL a solid choice for value investors, and some of its other key metrics make this pretty clear too.
For example, the PEG ratio for Delta Air Lines is just 0.79, a level that is considerably lower than the industry average of 1.43. The PEG ratio is a modified PE ratio that takes into account the stock’s earnings growth rate. Clearly, DAL is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though Delta Air Lines might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of ‘C’ and a Momentum score of ‘D’. This gives DAL a Zacks VGM score—or its overarching fundamental grade—of ‘A’. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been encouraging. The current quarter has seen five estimates go higher in the past sixty days and two lower, while the full year estimate has seen nine upward and no downward revisions in the same time period.
This has had a favorable impact on the consensus estimate, as the current quarter consensus estimate has risen by about 5.9% in the past two months, while the full year estimate has increased 5.4%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
This bullish trend is why the stock boasts a Zacks Rank #1 (Strong Buy) and why we are expecting outperformance from the company in the near term.
Bottom Line
Delta Air Lines is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. With a formidable industry rank (top 8% out of more than 250 industries) and top Zacks Rank, Delta Air Lines looks like a strong value contender. In fact, over the past one year, the sector has clearly outperformed the broader market, as you can see below:
So, it might pay for value investors to delve deeper into the company’s prospects, as fundamentals indicate that this stock could be a compelling pick.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
Image: Bigstock
Should Value Investors Consider Delta Air Lines (DAL) Stock?
Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Delta Air Lines, Inc. (DAL - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Delta Air Lines has a trailing twelve months PE ratio of 9.95, as you can see in the chart below:
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 compares in at about 20.09. If we focus on the stock’s long-term PE trend, the current level puts Delta Air Lines’ current PE ratio marginally above its midpoint (which is 9.85) over the past five years.
Further, the stock’s PE also compares favorably with the industry’s trailing twelve months PE ratio, which stands at 10.18. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that Delta Air Lines has a forward PE ratio (price relative to this year’s earnings) of just 9.01, so it is fair to say that a slightly more value-oriented path may be ahead for Delta Air Lines stock in the near term too.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Delta Air Lines has a P/S ratio of about 0.90. This is significantly lower than the S&P 500 average, which comes in at 3.24 right now. Also, as we can see in the chart below, this is slightly below the highs for this stock in particular over the past few years.
If anything, this suggests some level of undervalued trading—at least compared to historical norms.
Broad Value Outlook
In aggregate, Delta Air Lines currently has a Value Style Score of ‘A’, putting it into the top 20% of all stocks we cover from this look. This makes DAL a solid choice for value investors, and some of its other key metrics make this pretty clear too.
For example, the PEG ratio for Delta Air Lines is just 0.79, a level that is considerably lower than the industry average of 1.43. The PEG ratio is a modified PE ratio that takes into account the stock’s earnings growth rate. Clearly, DAL is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though Delta Air Lines might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of ‘C’ and a Momentum score of ‘D’. This gives DAL a Zacks VGM score—or its overarching fundamental grade—of ‘A’. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been encouraging. The current quarter has seen five estimates go higher in the past sixty days and two lower, while the full year estimate has seen nine upward and no downward revisions in the same time period.
This has had a favorable impact on the consensus estimate, as the current quarter consensus estimate has risen by about 5.9% in the past two months, while the full year estimate has increased 5.4%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Delta Air Lines, Inc. Price and Consensus
Delta Air Lines, Inc. Price and Consensus | Delta Air Lines, Inc. Quote
This bullish trend is why the stock boasts a Zacks Rank #1 (Strong Buy) and why we are expecting outperformance from the company in the near term.
Bottom Line
Delta Air Lines is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. With a formidable industry rank (top 8% out of more than 250 industries) and top Zacks Rank, Delta Air Lines looks like a strong value contender. In fact, over the past one year, the sector has clearly outperformed the broader market, as you can see below:
So, it might pay for value investors to delve deeper into the company’s prospects, as fundamentals indicate that this stock could be a compelling pick.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
See This Ticker Free >>