By Is it too late to invest in Delta Air Lines Inc (NYSE: DAL)?
It’s a reasonable question to ask considering the stock has already rallied about 40% since August 7th.
So, it makes sense to wonder if the holiday demand is already factored into DAL’s price.
A simple answer to this question would be a big fat no—at least that’s what management told us today.
Delta Air Lines reported very strong holiday bookings as it issued solid guidance for the fourth quarter on Thursday.
Why is Delta Air Lines stock down today?
Shares of Delta Air Lines are slipping this morning because the air carrier fell short of profit and revenue estimates for its third financial quarter. You can read the full earnings release from the air carrier at this link.
While investors are not accustomed to seeing weakness from an industry leader like DAL, it’s worth noting that the flagship airline attributed a 45-cent decline in adjusted earnings to the global CrowdStrike outage in its recently concluded quarter.
Additionally, the New York-listed firm is seeking full compensation for the $380 million revenue hit. If successful, this could result in a significant non-recurring benefit in one of its upcoming quarters.
Simply put, the current weakness could prove temporary and may turn into strength moving forward.
Delta Air Lines stock currently pays a dividend yield of 1.18%, making it more appealing to own, particularly for those concerned about an economic slowdown ahead.
Delta Air Lines shares are not expensive to own
Delta Air Lines is cutting routes to address overcapacity and improve its revenue per available seat mile (RASM).
Moreover, shares of the air carrier offer great value, regardless of the multiple uses—whether it’s the widely recognized price-to-earnings ratio or the enterprise value to EBITDA, which accounts for over $19 billion in adjusted net debt.
Notably, insider sentiment on DAL shares is also positive. Corporate insiders have purchased more Delta Air Lines shares over the past quarter compared to a year ago. In July, director Willie Chiang spent just under half a million dollars to acquire 10,000 shares of the airline.
Earlier this week, analysts at Susquehanna reiterated their “overweight” rating on Delta Air Lines stock, raising their price target on the NYSE-listed firm to $59. This signals a potential upside of 20% from the current price.
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