NEW YORK (TheStreet) -- Delta Air Lines (DAL) - Get Report shares closed down 1.32% to $44.96 in trading on Tuesday as the airline sector experienced a sharp decline today ahead of the release of this week's airline traffic reports as investors fear that expanding capacity will drive down fare prices.

Airline stocks, which recently benefited from falling oil and jet fuel prices, are declining today on investor worries about the companies' revenue per available seat mile, an important metric that industry insiders measure, as airlines add flights to expand capacity.

The fear is that such a practice will cause supply to outstrip demand, leading to a discount in prices, according to Bloomberg.

"The price of oil has gone down considerably, and will more than offset any pullback in terms of price to the consumer or even the fact that airlines may expand," Robert S. Bacarella, the chairman of Monetta Financial Services Inc who also owns shares of Delta and Southwest (LUV) - Get Report, told Bloomberg.

TheStreet Ratings team rates DELTA AIR LINES INC as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:

"We rate DELTA AIR LINES INC (DAL) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth and solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

• DAL's revenue growth trails the industry average of 22.4%. Since the same quarter one year prior, revenues slightly increased by 6.3%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
• Compared to its closing price of one year ago, DAL's share price has jumped by 29.82%, exceeding the performance of the broader market during that same time frame. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
• DELTA AIR LINES INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, DELTA AIR LINES INC reported lower earnings of $0.75 versus $12.29 in the prior year. This year, the market expects an improvement in earnings ($4.84 versus $0.75).
• Even though the current debt-to-equity ratio is 1.11, it is still below the industry average, suggesting that this level of debt is acceptable within the Airlines industry. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 0.39 is very low and demonstrates very weak liquidity.
• Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. In comparison to the other companies in the Airlines industry and the overall market, DELTA AIR LINES INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
• You can view the full analysis from the report here: DAL Ratings Report

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