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Should Value Investors Buy Delta Air Lines (DAL) Stock?

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Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

One stock to keep an eye on is Delta Air Lines (DAL - Free Report) . DAL is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock has a Forward P/E ratio of 8.49. This compares to its industry's average Forward P/E of 9.96. Over the last 12 months, DAL's Forward P/E has been as high as 8.79 and as low as 7.16, with a median of 8.05.

Investors will also notice that DAL has a PEG ratio of 0.61. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. DAL's industry currently sports an average PEG of 0.70. Over the past 52 weeks, DAL's PEG has been as high as 0.78 and as low as 0.43, with a median of 0.60.

Another valuation metric that we should highlight is DAL's P/B ratio of 2.60. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. This stock's P/B looks attractive against its industry's average P/B of 2.63. Over the past year, DAL's P/B has been as high as 2.96 and as low as 2.27, with a median of 2.60.

Finally, investors will want to recognize that DAL has a P/CF ratio of 5.63. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. DAL's current P/CF looks attractive when compared to its industry's average P/CF of 5.88. Within the past 12 months, DAL's P/CF has been as high as 6.08 and as low as 4.88, with a median of 5.54.

Value investors will likely look at more than just these metrics, but the above data helps show that Delta Air Lines is likely undervalued currently. And when considering the strength of its earnings outlook, DAL sticks out at as one of the market's strongest value stocks.


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