Post-pandemic leaders in the airline industry should start to emerge this earnings season and Wall Street will be seeing if Delta Air Lines (DAL) or United Airlines (UAL) will be at the forefront.
Delta and United are expected to report their fiscal first-quarter earnings on April 13 and 18 respectively.
Let’s see what’s in store for these airliners as they release their Q1 reports going into a somewhat Covid-19 free peak travel season.
Q1 Preview
The Zacks Consensus Estimate for Delta’s Q1 earnings is $0.31 per share compared to -$1.23 in the prior-year quarter. Sales are expected to be up 36% at $12.77 billion Vs. $9.35 billion in Q1 2022. This is certainly an indication that Delta is recovering from the pandemic.
Looking at United, its quarterly earnings are projected at -$0.61 per share compared to EPS of -$4.22 in Q1 2022. Sales for Q1 are expected at $11.42 billion which would be up 51% from $7.57 billion in the prior-year quarter. While United’s top-line recovery is impressive the company has had a longer path back to probability.
Performance & Valuation
Year to date, Delta stock is up +17% to top United and the Transportation-Airline Markets +5% performances while also beating the S&P 500’s +7%.
Even better, over the last three years and throughout the pandemic, UAL stock is now up +53% Vs. DAL’s +48% with both roughly on par with the benchmark and outperforming their Zacks Subindustry’s +9%.
Better still, Delta and United stocks still trade attractively relative to their past from a price-to-earnings perspective. Trading around $34 per share, UAL has a forward P/E of 6.5X with DAL stock trading at $44 a share and just 5.1X forward earnings.
Both stocks trade nicely beneath the industry average of 11.3X. Furthermore, Delta stock trades 78% below its decade-long high of 30.6X and at a 29% discount to the median of 9.2X. In comparison, United trades well below its extreme decade-long high of 747.2X and at a 42% discount to the median of 8.8X.
Growth & Outlook
With both Delta and United’s P/E valuations very attractive at the moment, monitoring their growth will be important in determining if their stocks are indeed undervalued.
Based on Zacks estimates, Delta’s earnings are forecasted to climb 61% this year at $5.17 per share compared to EPS of $3.20 in 2022. Plus, fiscal 2024 earnings are expected to leap another 32% to $6.84 per share.
On the top line, Delta’s sales are expected to be up 9% in FY23 and rise another 3% in FY24 to $57.16 billion. More importantly, fiscal 2024 would be a 21% increase from pre-pandemic levels with 2019 sales at $47 billion.
Pivoting to United, earnings are projected to soar 234% in FY23 at $8.44 per share compared to EPS of $2.52 in 2022. Fiscal 2024 EPS is expected to rise another 18%.
Sales are forecasted to jump 18% this year and rise another 5% in FY24 to $55.97 billion. Plus, fiscal 2024 would represent 29% growth from pre-pandemic sales of $43.25 billion in 2019.
Takeaway
After going through Delta and United’s outlook both stocks do make the case for being undervalued at the momemnt. It is noteworthy that they currently sport an overall “A” VGM Zacks Style Scores grade for the combination of Value, Growth, and Momentum.
To that point, both stocks land a Zacks Rank #3 (Hold) as there could certainly be more upside. With that being said, more upside in Delta and United stock will largely depend on their Q1 results and reconfirming their favorable outlooks in the guidance they are able to offer.
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If Biden Wins? If Trump Wins?
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1. Medical manufacturer has gained +11,000% in the last 15 years.
2. Rental company is absolutely crushing its sector.
3. Energy powerhouse plans to grow its already large dividend by 25%.
4. Aerospace and defense standout just landed a potentially $80 billion contract.
5. Giant Chipmaker is building huge plants in the U.S.
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Post-pandemic leaders in the airline industry should start to emerge this earnings season and Wall Street will be seeing if Delta Air Lines (DAL) or United Airlines (UAL) will be at the forefront.
Delta and United are expected to report their fiscal first-quarter earnings on April 13 and 18 respectively.
Let’s see what’s in store for these airliners as they release their Q1 reports going into a somewhat Covid-19 free peak travel season.
Q1 Preview
The Zacks Consensus Estimate for Delta’s Q1 earnings is $0.31 per share compared to -$1.23 in the prior-year quarter. Sales are expected to be up 36% at $12.77 billion Vs. $9.35 billion in Q1 2022. This is certainly an indication that Delta is recovering from the pandemic.
Looking at United, its quarterly earnings are projected at -$0.61 per share compared to EPS of -$4.22 in Q1 2022. Sales for Q1 are expected at $11.42 billion which would be up 51% from $7.57 billion in the prior-year quarter. While United’s top-line recovery is impressive the company has had a longer path back to probability.
Performance & Valuation
Year to date, Delta stock is up +17% to top United and the Transportation-Airline Markets +5% performances while also beating the S&P 500’s +7%.
Even better, over the last three years and throughout the pandemic, UAL stock is now up +53% Vs. DAL’s +48% with both roughly on par with the benchmark and outperforming their Zacks Subindustry’s +9%.
Better still, Delta and United stocks still trade attractively relative to their past from a price-to-earnings perspective. Trading around $34 per share, UAL has a forward P/E of 6.5X with DAL stock trading at $44 a share and just 5.1X forward earnings.
Both stocks trade nicely beneath the industry average of 11.3X. Furthermore, Delta stock trades 78% below its decade-long high of 30.6X and at a 29% discount to the median of 9.2X. In comparison, United trades well below its extreme decade-long high of 747.2X and at a 42% discount to the median of 8.8X.
Growth & Outlook
With both Delta and United’s P/E valuations very attractive at the moment, monitoring their growth will be important in determining if their stocks are indeed undervalued.
Based on Zacks estimates, Delta’s earnings are forecasted to climb 61% this year at $5.17 per share compared to EPS of $3.20 in 2022. Plus, fiscal 2024 earnings are expected to leap another 32% to $6.84 per share.
On the top line, Delta’s sales are expected to be up 9% in FY23 and rise another 3% in FY24 to $57.16 billion. More importantly, fiscal 2024 would be a 21% increase from pre-pandemic levels with 2019 sales at $47 billion.
Pivoting to United, earnings are projected to soar 234% in FY23 at $8.44 per share compared to EPS of $2.52 in 2022. Fiscal 2024 EPS is expected to rise another 18%.
Sales are forecasted to jump 18% this year and rise another 5% in FY24 to $55.97 billion. Plus, fiscal 2024 would represent 29% growth from pre-pandemic sales of $43.25 billion in 2019.
Takeaway
After going through Delta and United’s outlook both stocks do make the case for being undervalued at the momemnt. It is noteworthy that they currently sport an overall “A” VGM Zacks Style Scores grade for the combination of Value, Growth, and Momentum.
To that point, both stocks land a Zacks Rank #3 (Hold) as there could certainly be more upside. With that being said, more upside in Delta and United stock will largely depend on their Q1 results and reconfirming their favorable outlooks in the guidance they are able to offer.
Where Will Stocks Go…
If Biden Wins? If Trump Wins?
The answers may surprise you.
Since 1950, even after negative midterm years, the market has never had a lower presidential election year. With voters energized and engaged, the market has been almost unrelentingly bullish no matter which party wins!
Now is the time to download Zacks' free Special Report with 5 stocks that offer extreme upside for both Democrats and Republicans…
1. Medical manufacturer has gained +11,000% in the last 15 years.
2. Rental company is absolutely crushing its sector.
3. Energy powerhouse plans to grow its already large dividend by 25%.
4. Aerospace and defense standout just landed a potentially $80 billion contract.
5. Giant Chipmaker is building huge plants in the U.S.
Hurry, Download Special Report FREE >>
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