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Why Is Delta (DAL) Up 10.8% Since Last Earnings Report?
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A month has gone by since the last earnings report for Delta Air Lines (DAL - Free Report) . Shares have added about 10.8% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Delta due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Earnings Beat at Delta in Q1
Delta reported first-quarter 2024 earnings (excluding 39 cents from non-recurring items) of 45 cents per share, which comfortably beat the Zacks Consensus Estimate of 36 cents. Earnings increased 80% on a year-over-year basis. Revenues of $13.75 billion surpassed the Zacks Consensus Estimate of $12.84 billion and increased 7.75% on a year-over-year basis, driven by strong air-travel demand. Adjusted operating revenues (excluding third-party refinery sales) came in at $12.56 billion, up 6% year over year.
Passenger revenues, that accounted for 81% of total revenues, rose 7% year over year to $11.13 billion, just shy of our estimate of $11.17 billion. Domestic passenger revenues grew 5% year over year.
Passenger revenues improved on the international front. In fact, international passenger revenues increased 12% year over year, with transatlantic passenger unit revenues (PRASM) climbing 2%. Results were also aided by an uptick in travel spending by technology and financial services companies
Cargo revenues plunged 15% year over year to $178 million. The figure was higher than our estimate of $144 million. Other revenues increased 14% to $2.43 billion. The figure was well ahead of our estimate of $1.68 billion.
Adjusted operating margin was 5.1% compared with 4.6% a year ago.
Below, we present all figures (in percentage terms) in comparison with first-quarter 2023 results.
Revenue passenger miles (a measure of air traffic) increased 9% to 54.21 billion. Capacity (measured in available seat miles) expanded 7% to 65.54 billion. Load factor (percentage of seats filled by passengers) increased to 83% from 81%. The figure was also higher than our estimate of 82%.
Passenger revenues per available seat mile was flat at 17.98 cents. Passenger mile yield tumbled to 20.53 cents from 20.95 cents. On an adjusted basis, total revenues per available seat mile inched down 0.7% to 19.17 cents. The figure was a little higher than our estimate of 19.13 cents.
Total operating expenses, including special items, inched up 1% to $13.13 billion. Salaries and related costs hiked 12% to $3.79 billion. The increase was due to higher wages arising from the contract with pilots that was ratified in March 2023.
Fuel gallons consumed jumped 5% to $931 million. Average fuel price per gallon (adjusted) fell 10% to $2.76. Non-fuel unit cost (adjusted or CASM-Ex) inched up 1.5% to 14.08 cents.
DAL exited the first quarter of 2024 with cash and cash equivalents of $3.87 billion compared with $3.21 billion at the end of first-quarter 2023. The company had an adjusted net debt of $20.22 billion. Adjusted operating cash flow in the March quarter was $2.5 billion, with gross capital expenditures and free cash flow of $1.1 billion and $1.4 billion, respectively.
Outlook
Delta expects second-quarter 2024 adjusted earnings in the $2.20-$2.50 per share band. The adjusted operating margin in the June quarter is expected in the 14-15% range. Management projects second-quarter 2024 total revenues (adjusted) in the $15.3-$15.6 billion band, reflecting an increase of 5-7% from second-quarter 2023 actuals.Available seat miles in the June quarter are envisioned to increase 6-7% from the year-ago actuals. Non-fuel unit cost in second-quarter 2024 is likely to increase 2%. Second-quarter 2024 fuel price per gallon is suggested in the $2.7-$2.9 range.
DALstill expects 2024 adjusted earnings in the range of $6-$7 per share. For 2024, adjusted free cash flow is still expected in the $3-$4 billion range.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
VGM Scores
At this time, Delta has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Delta has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Delta (DAL) Up 10.8% Since Last Earnings Report?
A month has gone by since the last earnings report for Delta Air Lines (DAL - Free Report) . Shares have added about 10.8% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Delta due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Earnings Beat at Delta in Q1
Delta reported first-quarter 2024 earnings (excluding 39 cents from non-recurring items) of 45 cents per share, which comfortably beat the Zacks Consensus Estimate of 36 cents. Earnings increased 80% on a year-over-year basis. Revenues of $13.75 billion surpassed the Zacks Consensus Estimate of $12.84 billion and increased 7.75% on a year-over-year basis, driven by strong air-travel demand. Adjusted operating revenues (excluding third-party refinery sales) came in at $12.56 billion, up 6% year over year.
Passenger revenues, that accounted for 81% of total revenues, rose 7% year over year to $11.13 billion, just shy of our estimate of $11.17 billion. Domestic passenger revenues grew 5% year over year.
Passenger revenues improved on the international front. In fact, international passenger revenues increased 12% year over year, with transatlantic passenger unit revenues (PRASM) climbing 2%. Results were also aided by an uptick in travel spending by technology and financial services companies
Cargo revenues plunged 15% year over year to $178 million. The figure was higher than our estimate of $144 million. Other revenues increased 14% to $2.43 billion. The figure was well ahead of our estimate of $1.68 billion.
Adjusted operating margin was 5.1% compared with 4.6% a year ago.
Below, we present all figures (in percentage terms) in comparison with first-quarter 2023 results.
Revenue passenger miles (a measure of air traffic) increased 9% to 54.21 billion. Capacity (measured in available seat miles) expanded 7% to 65.54 billion. Load factor (percentage of seats filled by passengers) increased to 83% from 81%. The figure was also higher than our estimate of 82%.
Passenger revenues per available seat mile was flat at 17.98 cents. Passenger mile yield tumbled to 20.53 cents from 20.95 cents. On an adjusted basis, total revenues per available seat mile inched down 0.7% to 19.17 cents. The figure was a little higher than our estimate of 19.13 cents.
Total operating expenses, including special items, inched up 1% to $13.13 billion. Salaries and related costs hiked 12% to $3.79 billion. The increase was due to higher wages arising from the contract with pilots that was ratified in March 2023.
Fuel gallons consumed jumped 5% to $931 million. Average fuel price per gallon (adjusted) fell 10% to $2.76. Non-fuel unit cost (adjusted or CASM-Ex) inched up 1.5% to 14.08 cents.
DAL exited the first quarter of 2024 with cash and cash equivalents of $3.87 billion compared with $3.21 billion at the end of first-quarter 2023. The company had an adjusted net debt of $20.22 billion. Adjusted operating cash flow in the March quarter was $2.5 billion, with gross capital expenditures and free cash flow of $1.1 billion and $1.4 billion, respectively.
Outlook
Delta expects second-quarter 2024 adjusted earnings in the $2.20-$2.50 per share band. The adjusted operating margin in the June quarter is expected in the 14-15% range. Management projects second-quarter 2024 total revenues (adjusted) in the $15.3-$15.6 billion band, reflecting an increase of 5-7% from second-quarter 2023 actuals.Available seat miles in the June quarter are envisioned to increase 6-7% from the year-ago actuals. Non-fuel unit cost in second-quarter 2024 is likely to increase 2%. Second-quarter 2024 fuel price per gallon is suggested in the $2.7-$2.9 range.
DALstill expects 2024 adjusted earnings in the range of $6-$7 per share. For 2024, adjusted free cash flow is still expected in the $3-$4 billion range.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
VGM Scores
At this time, Delta has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Delta has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.