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The Zacks Analyst Blog Highlights: Delta, American Airlines, United and Southwest
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For Immediate Release
Chicago, IL –October 14, 2019 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Delta Airlines (DAL - Free Report) , American Airlines (AAL - Free Report) , United Airlines (UAL - Free Report) and Southwest Airlines (LUV - Free Report) .
Here are highlights from Friday’s Analyst Blog:
What to Expect from Netflix (NFLX) Earnings?
Airlines Poised as a Buy Following Delta’s Earnings Release
The cyclical airline segment could be lining up as a buy. Historically, the fourth quarter produces the strongest returns for airline stocks with an average gain of 8% since 1990, according to a recent WSJ article. This is due to analysts being increasingly optimistic in winter months pushing stock prices up in the last months of the year.
Delta Airlines kicked off Q3 earnings this week, giving us clues for what to expect in the remaining releases this month.
Delta’s Results
The world’s largest airline released its earnings before market open Thursday, October 10th, with mixed results. Delta just demonstrated not only the best sales since the company’s inception but its most profitable quarter.
DAL initially fell in morning trading on Thursday due to a slight miss on revenues and management guiding costs higher. Investors are concerned about rising costs due to a hiring expansion. According to CEO Ed Bastian, Delta was short of pilots and attendants last summer and wants to avoid this strain moving forward by hiring 6,000 new employees (900 pilots).
Delta's slight miss on revenue was due to some enthusiastic analysts who overstated the positive impact of the airline not flying the MAX and the market share that they would be taking. None the less, Delta did take a sizable amount of market share and grew its topline over 5% year-over-year with the primary drivers being its loyalty and premium offerings.
Falling gas prices substantially improved Delta's bottom line, and this is expected to spill over into all the other airlines' upcoming earnings. The large airline stocks have rallied since yesterday morning on the hopes that Delta's promising earnings is a signal of robust Q3 financials from the rest of the market.
Market Implications
The Boeing 737 MAX was the big market news this year, impacting every airline in one way or another. American Airlines said that this crafts grounding caused them to cancel thousands of flights and cost the firm roughly $185 million in its second quarter.
Delta took over as the global airline market leader following the Boeing MAX debacle. Delta didn’t fly any of the Boeing MAX planes, and its capacity was not affected when the aircraft was grounded. Delta was able to take market share from the former leader American Airlines.
The Boeing MAX's grounding continues to be extended, with its current expected fly date being January 16th. Once this aircraft is finally cleared for use, the capacity of the industry will significantly increase, shaking up the market.
Analysts have historically understated the summer quarter earnings, and I believe that this may be the case in the remaining 3rd quarter airline reports. Analysts may have overstated the market loss that each of these airlines experienced this past quarter, and a sizable upside may be in store in the coming month.
Take Away
American Airlines, United Airlines and Southwest Airlines all report later this month. I expect to see some positive upsides in at least some of these reports. Analysts have slashed expectations, and it won’t take much to beat them.
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Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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The Zacks Analyst Blog Highlights: Delta, American Airlines, United and Southwest
For Immediate Release
Chicago, IL –October 14, 2019 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Delta Airlines (DAL - Free Report) , American Airlines (AAL - Free Report) , United Airlines (UAL - Free Report) and Southwest Airlines (LUV - Free Report) .
Here are highlights from Friday’s Analyst Blog:
What to Expect from Netflix (NFLX) Earnings?
Airlines Poised as a Buy Following Delta’s Earnings Release
The cyclical airline segment could be lining up as a buy. Historically, the fourth quarter produces the strongest returns for airline stocks with an average gain of 8% since 1990, according to a recent WSJ article. This is due to analysts being increasingly optimistic in winter months pushing stock prices up in the last months of the year.
Delta Airlines kicked off Q3 earnings this week, giving us clues for what to expect in the remaining releases this month.
Delta’s Results
The world’s largest airline released its earnings before market open Thursday, October 10th, with mixed results. Delta just demonstrated not only the best sales since the company’s inception but its most profitable quarter.
DAL initially fell in morning trading on Thursday due to a slight miss on revenues and management guiding costs higher. Investors are concerned about rising costs due to a hiring expansion. According to CEO Ed Bastian, Delta was short of pilots and attendants last summer and wants to avoid this strain moving forward by hiring 6,000 new employees (900 pilots).
Delta's slight miss on revenue was due to some enthusiastic analysts who overstated the positive impact of the airline not flying the MAX and the market share that they would be taking. None the less, Delta did take a sizable amount of market share and grew its topline over 5% year-over-year with the primary drivers being its loyalty and premium offerings.
Falling gas prices substantially improved Delta's bottom line, and this is expected to spill over into all the other airlines' upcoming earnings. The large airline stocks have rallied since yesterday morning on the hopes that Delta's promising earnings is a signal of robust Q3 financials from the rest of the market.
Market Implications
The Boeing 737 MAX was the big market news this year, impacting every airline in one way or another. American Airlines said that this crafts grounding caused them to cancel thousands of flights and cost the firm roughly $185 million in its second quarter.
Delta took over as the global airline market leader following the Boeing MAX debacle. Delta didn’t fly any of the Boeing MAX planes, and its capacity was not affected when the aircraft was grounded. Delta was able to take market share from the former leader American Airlines.
The Boeing MAX's grounding continues to be extended, with its current expected fly date being January 16th. Once this aircraft is finally cleared for use, the capacity of the industry will significantly increase, shaking up the market.
Analysts have historically understated the summer quarter earnings, and I believe that this may be the case in the remaining 3rd quarter airline reports. Analysts may have overstated the market loss that each of these airlines experienced this past quarter, and a sizable upside may be in store in the coming month.
Take Away
American Airlines, United Airlines and Southwest Airlines all report later this month. I expect to see some positive upsides in at least some of these reports. Analysts have slashed expectations, and it won’t take much to beat them.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.