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Category: Stock Market and Delta Airlines
Date: 10 October 2019 Stock Price: $53.92 We take a look at the 3rd quarter earnings report of their 20219 fiscal year of Delta Airlines, a U.S global airline company that has over 5000 departing flights on a daily basis across the world.
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About Delta Airlines
Delta Air Lines (NYSE: DAL) is the U.S. global airline leader in products, services, innovation, reliability and customer experience. Powered by its 80,000 people around the world, Delta continues to invest in its people, improving the air travel experience and generating industry-leading shareholder returns.
Headquartered in Atlanta, Delta offers more than 5,000 daily departures and as many as 15,000 affiliated departures including the premier SkyTeam alliance, of which Delta is a founding member. Delta serves nearly 200 million people every year, taking customers across its industry-leading global network to more than 300 destinations in over 50 countries.
Headquartered in Atlanta, Delta offers more than 5,000 daily departures and as many as 15,000 affiliated departures including the premier SkyTeam alliance, of which Delta is a founding member. Delta serves nearly 200 million people every year, taking customers across its industry-leading global network to more than 300 destinations in over 50 countries.
Overview of Delta Airlines' latest earnings report
Data below is reported for the latest quarter unless stated otherwise
- Revenue: $12.560 billion (pu from $11.953 billion for the same quarter of the previous year)
- Revenue increased by 5% over the last 12 months
- Operating expenses: $10.489 billion (up from $10.308 billion for the same quarter of the previous year)
- Operating expenses increased by 2% over the last 12 months
- Net earnings: $1.495 billion (up from $1.322 billion for the same quarter of the previous year)
- Diluted earnings per share: $2.31 (up from $1.92 for the same quarter of the previous year)
- Dividend declared: $0.4025
- Dividend yield: 2.96%
- Dividend yield: 2.96%
- Diluted weighted-average shares outstanding: 648 million (down from 688 million for the same quarter of the previous year)
- Cash and cash equivalents: $1.899 billion
- Cash and cash equivalents per share: $2.93
- Cash and cash equivalents makes up 4.13% of Delta Airlines' market capital
- Cash and cash equivalents makes up 3% of Delta Airlines' total assets
- Accounts receivable: $2.836 billion
- Accounts receivable makes up 4.48% of Delta Airlines' total assets
- Goodwill: $9.718 billion
- Goodwill makes up 15.47% of Delta Airlines' total assets
- Stockholders equity of Delta Airlines' : $15.068 billion
- Stockholders equity per share: $23.25
- So Delta Airlines is trading at 2.31 times its stockholders equity per share. This is within the expected range of between 2 and 4 most firms tend to trade at
- Long term debt of Delta Airlines: $7.923 billion
- Long term debt makes up 16.47% of Delta Airlines total liabilities
- Cash generated from operations by Delta Airlines: $2.245 billion
- Cash generated from operations per share: $ 3.46
Delta Airlines's management commentary on the results and fiscal guidance
ATLANTA, Oct. 10, 2019 - Delta Air Lines (NYSE:DAL) today reported financial results for the September quarter 2019 and provided its outlook for the December quarter 2019. Highlights of the September quarter 2019 results, including both GAAP and adjusted metrics.
“Our powerful brand and competitive strengths drove another quarter of great results for our people, customers and owners. Our people bring our brand to life on every flight and I’m pleased to recognize their outstanding efforts with over $1 billion in profit sharing accrued so far this year,” said Ed Bastian, Delta’s chief executive officer. “Demand for the Delta product remains healthy, positioning the company for a strong close to 2019 with expectations for more than 20% earnings growth, over $4 billion in free cash flow and a 5th year of pre-tax earnings over $5 billion.”
December Quarter 2019 Outlook
For the December quarter, Delta expects to deliver solid top-line growth and operating margin expansion. Year over-year pre-tax margin is impacted by the one-time $91 million gain from the sale of the DAL Global Services business in the December 2018 quarter.
The image below shows the December 2019 quarter outlook as provided by Delta
- Returned $468 million to shareholders, comprised of $208 million of share repurchases and $260 million in dividends.
- Generated $7.5 billion of operating cash flow and $4.0 billion of free cash flow on a year-to-date basis, after investing $3.5 billion into the business, primarily for aircraft purchases and modifications.
“Our powerful brand and competitive strengths drove another quarter of great results for our people, customers and owners. Our people bring our brand to life on every flight and I’m pleased to recognize their outstanding efforts with over $1 billion in profit sharing accrued so far this year,” said Ed Bastian, Delta’s chief executive officer. “Demand for the Delta product remains healthy, positioning the company for a strong close to 2019 with expectations for more than 20% earnings growth, over $4 billion in free cash flow and a 5th year of pre-tax earnings over $5 billion.”
December Quarter 2019 Outlook
For the December quarter, Delta expects to deliver solid top-line growth and operating margin expansion. Year over-year pre-tax margin is impacted by the one-time $91 million gain from the sale of the DAL Global Services business in the December 2018 quarter.
The image below shows the December 2019 quarter outlook as provided by Delta
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Delta Airlines (NYSE: DAL) stock price history
The image below, obtained from Google, shows the stock price history of Delta Airlines (NYSE: DAL) over the last 5 years. And it's been a pretty good time for Delta Airlines' stockholders. 5 years ago it was trading at around $32.90 and its currently trading at around $53.92 a stock. That's a return of 60.88% provided to Delta Airlines stockholders over the last 5 years. While the return provided is pretty decent the opportunity cost of holding Delta Airlines stock that made 60.88% over the last 5 years compared to holding Netflix for example that made over 300% becomes very significant. The stock of Delta Airlines is trading at closer to its 52 week low of $45.08 than it is to its 52 week high of $63.44 which to us is a clear indication that the short term sentiment and momentum of Delta Airlines' stock is pretty negative right now.
Recent coverage of Delta Airlines
The extract below discusses the latest results from Delta Airlines as obtained from Thestreet,com
Delta Airlines Inc. (DAL - Get Report) posted stronger-than-expected third quarter earnings Thursday and said it would accelerate near-term hiring to meet a "surprise" increase in demand. Delta said adjusted earnings for the three months ending in September came in at $2.32 per share, up 29% from the same period last year and 5 cents ahead of the Street consensus forecast. Group net revenues, Delta said, rose 6.5% to $12.6 billion, largely in line with analysts' estimates. The carrier said it sees current quarter earnings in the region of $1.20 to $1.50 per share, and expects revenues to grow by more than 5% from the prior year period.
"Our powerful brand and competitive strengths drove another quarter of great results for our people, customers and owners. Our people bring our brand to life on every flight and I'm pleased to recognize their outstanding efforts with over $1 billion in profit sharing accrued so far this year," said CEO Ed Bastian. "Demand for the Delta product remains healthy, positioning the company for a strong close to 2019 with expectations for more than 20% earnings growth, over $4 billion in free cash flow and a 5th year of pre-tax earnings over $5 billion." Delta shares were marked 1.7% lower in pre-market trading immediately following the earnings release to indicate an opening bell price of $52.98 a move that would trim the stock's year-to-date decline to around 6.2%.
Read the full article here
Delta Airlines Inc. (DAL - Get Report) posted stronger-than-expected third quarter earnings Thursday and said it would accelerate near-term hiring to meet a "surprise" increase in demand. Delta said adjusted earnings for the three months ending in September came in at $2.32 per share, up 29% from the same period last year and 5 cents ahead of the Street consensus forecast. Group net revenues, Delta said, rose 6.5% to $12.6 billion, largely in line with analysts' estimates. The carrier said it sees current quarter earnings in the region of $1.20 to $1.50 per share, and expects revenues to grow by more than 5% from the prior year period.
"Our powerful brand and competitive strengths drove another quarter of great results for our people, customers and owners. Our people bring our brand to life on every flight and I'm pleased to recognize their outstanding efforts with over $1 billion in profit sharing accrued so far this year," said CEO Ed Bastian. "Demand for the Delta product remains healthy, positioning the company for a strong close to 2019 with expectations for more than 20% earnings growth, over $4 billion in free cash flow and a 5th year of pre-tax earnings over $5 billion." Delta shares were marked 1.7% lower in pre-market trading immediately following the earnings release to indicate an opening bell price of $52.98 a move that would trim the stock's year-to-date decline to around 6.2%.
Read the full article here
Delta Airlines (NYSE: DAL) latest stock valuation
So what is Delta Airlines' stock worth based on the release of their latest earnings report and the fiscal guidance provided by Delta Airlines? Based on the latest earnings results, and their fiscal guidance our valuation models provide a target (full value) price for Delta Airlines at $76.80 a Delta Airlines stock. We therefore believe that the stock is slightly undervalued at its current price of $53.92
We usually suggest long term fundamental or value investors look to enter into a stock at least 10% below our target (full value) price which in this case is $76.80. Therefore we see a good entry point into Delta Airlines stock at $69.10 or below. Since Delta Airlines is trading at well below our suggested entry point into the stock we rate Delta Airlines as a buy.
We usually suggest long term fundamental or value investors look to enter into a stock at least 10% below our target (full value) price which in this case is $76.80. Therefore we see a good entry point into Delta Airlines stock at $69.10 or below. Since Delta Airlines is trading at well below our suggested entry point into the stock we rate Delta Airlines as a buy.