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Fuel and non-fuel costs climbed sharply, narrowing upside after Delta's strong rally.
Management still expects full-year 2026 earnings per share in the band of $6.50-$7.50.
Delta Air Lines (DAL - Free Report) has rallied sharply, helped by resilient demand, premium revenue growth and improving earnings sentiment. The stock’s setup is no longer a simple cheap-airline recovery trade.
For investors comparing DAL with United Airlines (UAL - Free Report) and American Airlines (AAL - Free Report) , the question is whether Delta’s stronger revenue mix still leaves enough upside after the move.
DAL Valuation Still Looks Reasonable
DAL trades at 0.85X forward 12-month sales. That is above its five-year median of 0.53X, so the stock is not as deeply discounted as it once was.
Still, the multiple remains below the Zacks sector’s 1.53X and well below the S&P 500’s 5.07X. That gives bulls a valuation argument, even after a 21.9% three-month gain and a 54.3% rise over the past year.
Delta Has Earnings Support From Revisions
Estimate revisions are a key part of the near-term case. The current fiscal-year earnings estimate has moved 25.7% higher over the past four weeks, a strong signal that analyst sentiment has improved.
Delta also posted a 3.3% positive earnings surprise in the latest quarter, with adjusted earnings of $1.56 per share. Management reaffirmed full-year adjusted earnings guidance of $6.50-$7.50 per share and free cash flow guidance of $3-$4 billion.
The airline has an impressive earnings surprise record, having outpaced the Zacks Consensus Estimate in each of the past four quarters. The average beat is 5.5%.
The caution case starts with fuel. Adjusted fuel expense jumped 77% year over year in the June quarter, while adjusted fuel price rose 75% to $3.93 per gallon.
Non-fuel costs are also elevated. Non-fuel cost per available seat mile increased 6.8% year over year in the June quarter, and Delta continues to absorb wage, crew-related and recovery costs. Airlines can show strong demand and still see margins compress quickly when fuel and labor move against them.
Delta Has Upside but Less Margin for Error
The $93 price target compares with a $87.39 stock price, implying remaining upside but not a wide margin of safety. That matters after the rally.
Delta’s premium, loyalty and corporate revenue streams still support the investment case. But the reward-to-risk spread has narrowed, especially for investors uncomfortable with fuel volatility, consumer sensitivity and geopolitical uncertainty.
DAL Scores Favor Value and Momentum
The bottom line is that DAL still looks attractive in several respects, but it is not an uncomplicated buy. The stock currently carries a Zacks Rank #3 (Hold), which points to a balanced near-term setup rather than a decisive bullish call. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Style Scores are more constructive. DAL has a Value Score of A, Momentum Score of A and VGM Score of A, suggesting favorable valuation and trading characteristics. Its Growth Score of C tempers the case, reinforcing that the stock has upside potential but less room for disappointment after its rally.
View the Zacks #1 Rank List
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Is DAL Stock a Buy Now After Rallying on Stronger Revenue Mix?
Key Takeaways
Delta Air Lines (DAL - Free Report) has rallied sharply, helped by resilient demand, premium revenue growth and improving earnings sentiment. The stock’s setup is no longer a simple cheap-airline recovery trade.
For investors comparing DAL with United Airlines (UAL - Free Report) and American Airlines (AAL - Free Report) , the question is whether Delta’s stronger revenue mix still leaves enough upside after the move.
DAL Valuation Still Looks Reasonable
DAL trades at 0.85X forward 12-month sales. That is above its five-year median of 0.53X, so the stock is not as deeply discounted as it once was.
Still, the multiple remains below the Zacks sector’s 1.53X and well below the S&P 500’s 5.07X. That gives bulls a valuation argument, even after a 21.9% three-month gain and a 54.3% rise over the past year.
Delta Has Earnings Support From Revisions
Estimate revisions are a key part of the near-term case. The current fiscal-year earnings estimate has moved 25.7% higher over the past four weeks, a strong signal that analyst sentiment has improved.
Delta also posted a 3.3% positive earnings surprise in the latest quarter, with adjusted earnings of $1.56 per share. Management reaffirmed full-year adjusted earnings guidance of $6.50-$7.50 per share and free cash flow guidance of $3-$4 billion.
The airline has an impressive earnings surprise record, having outpaced the Zacks Consensus Estimate in each of the past four quarters. The average beat is 5.5%.
Delta Air Lines Price and EPS Surprise
Delta Air Lines price-eps-surprise | Delta Air Lines Quote
DAL Faces Real Margin Pressure
The caution case starts with fuel. Adjusted fuel expense jumped 77% year over year in the June quarter, while adjusted fuel price rose 75% to $3.93 per gallon.
Non-fuel costs are also elevated. Non-fuel cost per available seat mile increased 6.8% year over year in the June quarter, and Delta continues to absorb wage, crew-related and recovery costs. Airlines can show strong demand and still see margins compress quickly when fuel and labor move against them.
Delta Has Upside but Less Margin for Error
The $93 price target compares with a $87.39 stock price, implying remaining upside but not a wide margin of safety. That matters after the rally.
Delta’s premium, loyalty and corporate revenue streams still support the investment case. But the reward-to-risk spread has narrowed, especially for investors uncomfortable with fuel volatility, consumer sensitivity and geopolitical uncertainty.
DAL Scores Favor Value and Momentum
The bottom line is that DAL still looks attractive in several respects, but it is not an uncomplicated buy. The stock currently carries a Zacks Rank #3 (Hold), which points to a balanced near-term setup rather than a decisive bullish call. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Style Scores are more constructive. DAL has a Value Score of A, Momentum Score of A and VGM Score of A, suggesting favorable valuation and trading characteristics. Its Growth Score of C tempers the case, reinforcing that the stock has upside potential but less room for disappointment after its rally.