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Bull of the Day: Delta Air Lines (DAL)

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With a recent miss in earnings season, you might be surprised to see Delta Air Lines (DAL - Free Report) as a bull of the day. However, the miss—which was just by two pennies per share—was the first such miss of expectations since the start of 2016, while the outlook remains pretty solid for the company.

So, while shares have sold off in the immediate aftermath of the report, could this be offering investors a nice buying opportunity for the longer-term? The answer may be yes if we look to recent earnings estimate revisions as a guide.

Recent Estimates

Despite the lackluster earnings report, analysts appear remarkably unfazed in terms of their opinion on DAL stock for the near term. We have actually seen eight estimates move higher for the current year in the past month, while the next quarter has seen six estimates move higher in the same time frame.

The magnitude of these estimate changes has also been impressive, and it has certainly had an impact on the consensus estimate. Over the past two months, the next quarter consensus estimate has soared by roughly 14.3%, while the full year and next year estimates have also moved higher by over 5.5% each as well.

With figures like those and an industry rank in the top 5% overall, it shouldn’t be too shocking that we still believe this segment has room to fly higher. Which is why, even with the recent turbulence, we believe that DAL has earned a Zacks Rank #1 (Strong Buy) rating.

Other Factors

If the strong earnings estimate picture wasn’t enough to convince you, consider the company’s fundamental score too. Right now, DAL has an ‘A’ VGM score, and doesn’t have a component grade lower than ‘C’ either.

The stock may be especially intriguing to value investors, as DAL has an ‘A’ Score on that front. Not only is its forward PE below 10, but it has an earnings yield in double digit percentage territory, while its PEG is below 1 as well, so it is pretty well-rounded from a number of value angles.

Bottom Line

Though DAL has seen some choppy trading as of late, the stock still has potential for gains in the longer term if we consider its fundamentals. Not only is the airline industry still at the top of the charts, but DAL has recently moved into ‘strong buy’ territory too.

Add in a great value score and the potential to buy this company on the dip, and investors have a compelling case on their hands for Delta Air Lines stock in the near term.


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