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Delta Air Lines (DAL) Hits 52-Week High: What's Driving It?
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Shares of Delta Air Lines, Inc. (DAL - Free Report) scaled a 52-week high of $48.17 in the trading session on Jul 03, 2023, before closing a tad lower at $47.96.
The company’s shares have gained 46.1% year to date, significantly higher than 35.9% growth of the industry it belongs to.
Image Source: Zacks Investment Research
Let’s find out the factors supporting the uptick.
Bullish Q2 Outlook
Delta Air Lines’ management has issued a favorable outlook for the second quarter and full-year 2023 at the company’s Investor Day presentation. The company attributes this positive outlook to upbeat air-travel demand.
For second-quarter 2023, Delta now expects adjusted earnings per share (EPS) to be in the range of $2.25-$2.50 (prior view: $2-$2.25). Further, DAL now anticipates registering revenue growth between 17% and 18%, higher than the previous range of 15% to 17%. Operating margin for the second quarter is expected to be 16%.
For 2023, Delta also raised its outlook. DAL now anticipates full-year adjusted EPS to be $6, which aligns with the top end of its previous expectation in the $5-$6 range.
DAL has also raised its revenue growth outlook to 17%-20% compared with the previously forecasted 15%-20%. In 2023, Delta now expects to generate free cash of $3 billion (prior view: $2 billion). The company now anticipates current-year operating margin at the top end of the 10-12% range expected previously.
For fiscal 2024, the airline still expects EPS to exceed $7 and a free cash flow of more than $4 billion. It also foresees an operating margin of 13% to 15%.
Dividend Resumption
Highlighting DAL’s financial strength, its management recently announced the resumption of its dividend payout. DAL’s board of directors has approved a dividend payment of 10 cents per share. The renewed dividend will be paid on Aug 7, 2023, to all its shareholders of record as of Jul 17, 2023. The move reflects DAL’s intention to utilize free cash to enhance its shareholders’ returns.
This resumption reflects Delta's progress on its three-year financial plan (which includes debt repayment of more than $10 billion in the last two years).
Moreover, the lifting of restrictions under the CARES Act (which prohibited airline companies from paying dividends or buying back shares till Sep 30, 2022) enabled DAL to initiate its shareholder-friendly move.
Copa Holdings has an expected earnings growth rate of 75.42% for the current year. CPA delivered a trailing four-quarter earnings surprise of 14.60%, on average.
The Zacks Consensus Estimate for CPA’s current-year earnings has improved 25.5% over the past 90 days. Shares of CPA have soared 32.5% over the past six months.
Allegiant has an expected earnings growth rate of more than 100% for the current year. ALGT delivered a trailing four-quarter earnings surprise of 79.78%, on average.
The Zacks Consensus Estimate for ALGT’s current-year earnings has improved 46.5% over the past 90 days. Shares of ALGT have surged 74% over the past six months.
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Delta Air Lines (DAL) Hits 52-Week High: What's Driving It?
Shares of Delta Air Lines, Inc. (DAL - Free Report) scaled a 52-week high of $48.17 in the trading session on Jul 03, 2023, before closing a tad lower at $47.96.
The company’s shares have gained 46.1% year to date, significantly higher than 35.9% growth of the industry it belongs to.
Image Source: Zacks Investment Research
Let’s find out the factors supporting the uptick.
Bullish Q2 Outlook
Delta Air Lines’ management has issued a favorable outlook for the second quarter and full-year 2023 at the company’s Investor Day presentation. The company attributes this positive outlook to upbeat air-travel demand.
For second-quarter 2023, Delta now expects adjusted earnings per share (EPS) to be in the range of $2.25-$2.50 (prior view: $2-$2.25). Further, DAL now anticipates registering revenue growth between 17% and 18%, higher than the previous range of 15% to 17%. Operating margin for the second quarter is expected to be 16%.
For 2023, Delta also raised its outlook. DAL now anticipates full-year adjusted EPS to be $6, which aligns with the top end of its previous expectation in the $5-$6 range.
DAL has also raised its revenue growth outlook to 17%-20% compared with the previously forecasted 15%-20%. In 2023, Delta now expects to generate free cash of $3 billion (prior view: $2 billion). The company now anticipates current-year operating margin at the top end of the 10-12% range expected previously.
For fiscal 2024, the airline still expects EPS to exceed $7 and a free cash flow of more than $4 billion. It also foresees an operating margin of 13% to 15%.
Dividend Resumption
Highlighting DAL’s financial strength, its management recently announced the resumption of its dividend payout. DAL’s board of directors has approved a dividend payment of 10 cents per share. The renewed dividend will be paid on Aug 7, 2023, to all its shareholders of record as of Jul 17, 2023. The move reflects DAL’s intention to utilize free cash to enhance its shareholders’ returns.
This resumption reflects Delta's progress on its three-year financial plan (which includes debt repayment of more than $10 billion in the last two years).
Moreover, the lifting of restrictions under the CARES Act (which prohibited airline companies from paying dividends or buying back shares till Sep 30, 2022) enabled DAL to initiate its shareholder-friendly move.
Zacks Rank & Stocks to Consider
Delta currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks for investors interested in the Zacks Transportation sector are Copa Holdings (CPA - Free Report) and Allegiant Travel Company (ALGT - Free Report) . Each of these companies presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Copa Holdings has an expected earnings growth rate of 75.42% for the current year. CPA delivered a trailing four-quarter earnings surprise of 14.60%, on average.
The Zacks Consensus Estimate for CPA’s current-year earnings has improved 25.5% over the past 90 days. Shares of CPA have soared 32.5% over the past six months.
Allegiant has an expected earnings growth rate of more than 100% for the current year. ALGT delivered a trailing four-quarter earnings surprise of 79.78%, on average.
The Zacks Consensus Estimate for ALGT’s current-year earnings has improved 46.5% over the past 90 days. Shares of ALGT have surged 74% over the past six months.