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Ryan McQueeney

Here's Why Delta (DAL) Stock Is Up Despite Revenue Miss


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Shares of Delta Air Lines (DAL - Analyst Report) have moved about 1.5% higher Thursday, despite the company announcing revenues that missed expectations in its latest earnings report.

The Atlanta, GA-based carrier reported earnings of $1.70 per share, which beat the Zacks Consensus Estimate of $1.65. However, its quarterly revenue of $10.483 billion declined 2.3% year-over-year and missed our consensus estimate of $10.595 billion.

Also Read: Delta Air Lines Beats on Q3 Earnings, Misses Sales

Despite relatively disappointing revenue, Delta is moving higher on one key piece of data from its report, according to Stifel analyst Joseph DeNardi.

“Delta provided initial guidance for 2017 capacity growth of +1% which is better than most expected, in our view… Now, the question will come down to how that 1% growth is split domestic vs. international,” Denardi said, via Barron’s.

DeNardi blamed the weak pricing environment many airliners are facing on the current supply glut and said that any capacity growth above 1% would be “excessive.” The analyst also noted that Passenger Revenue per Available Seat Mile, or PRASM, would be an important figure to track going forward.

“Delta being the 2nd airline to provide constructive 2017 guidance and the 1st of the Big 3 to do so, gives us more confidence that pricing trends will improve and reinforces our view that, all-in, the thesis of capacity discipline is largely intact – though it’s taken longer than expected to be enforced during this period of PRASM weakness,” he concluded.

For now, Delta remains a Zacks Rank #3 (Hold).

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