Delta Airlines (DAL) Stock | “Fueling” An Earnings Beat

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Delta Air Lines, Inc. (NYSE: DAL)

 

Earnings Report

Before the market opened on Wednesday, Delta Airlines (DAL) released earnings that easily beat analyst estimates thanks to low fuel prices. The company reported earnings of $1.74 per share on $11.11 billion in revenues while analysts were expecting $1.70 per share on $11.1 billion in revenues. This was also better than the same period last year, which came in at $1.20 per share on $11.18 billion in revenues. Lower fuel prices, which account for a third of the company’s costs, helped save on expenses and offset the impact of a strong dollar, which flowed through to bottom line profits and on to investors. Revenues were also on point, as demand remained consistent. CEO Richard Anderson stated in their conference call,

“As demand is good, we essentially held revenues flat against a steep decline in fuel which allows Delta to bring about two-thirds of our fuel savings to the bottom-line for our owners.

Therefore despite economic uncertainty in some international markets such as Brazil and Japan, and the impact of a strong dollar, we were able to expand operating margins by 5 points to 21%, and improve earnings per share by 45%. We generated $2.4 billion in operating cash flow and $1.4 billion in free cash flow in the quarter, and we have delivered a return on invested capital of 26.3% for the last 12 months.SeekingAlpha

This was a great earnings report for DAL and with oil prices to remain favorable for the foreseeable future this should give the stock the juice it needs to break new highs for the year. Currently analysts have a buy recommendation with an average price target of $60.57 and as long as oil prices are around their current level I too like the upside on the airlines industry.

 

DAL  Technicals

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Share prices were a big mixed after the DAL released earnings as they first surged to $49.48 before coming back down to the $47.93 mark. Shares eventually cooled off and closed the day at $48.59, almost a 2% pop from the previous day’s close. As long as DAL holds that $48 level I like this to the upside and would really like to see this get some momentum into that big $50 level. Moving averages are all starting to point north and the RSI is heading into the 60s on this move up making a strong argument for the bulls.

On a longer term scale, DAL has been somewhat of a lackluster stock this year as prices have stuck between the $50 and $45 levels with highs coming in at the beginning of the year at $51.06 and lows touching $34.61 on the big market selloff last month. Shares recently passed over a big resistance level at $48, which will now act as support as shares continue to make upward movement and the next level of resistance will come in at the $50 level. Keep an eye on these big levels for an opportunity to make your entry.

 

About Delta Airlines, Inc.

Delta Air Lines, Inc. provides scheduled air transportation for passengers and cargo throughout the United States and around the world. Its route network is centered around a system of hub and international gateway airports that it operates in Amsterdam, Atlanta, Cincinnati, Detroit, Memphis, Minneapolis-St. Paul, New York-LaGuardia, New York-JFK, Paris-Charles de Gaulle, Salt Lake City, Seattle and Tokyo-Narita. The company operates its business through two segments: Airline and Refinery. The Airline segment provides scheduled air transportation for passengers and cargo throughout the United States and around the world and other ancillary airline services, including maintenance and repair services for third parties. The Refinery segment provides jet fuel to the airline segment from its own production and through jet fuel obtained through the agreements with Phillips 66 and BP. The company was founded by Collett Everman Woolman in 1928 and is headquartered in Atlanta, GA. MarketWatch

 

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