Delta Air Lines (DAL) Stock Slides in After-Hours Trading, Raises Aeromexico Stake

Delta Air Lines (DAL) stock is falling in after-hours trading on Wednesday, after announcing its intention to acquire up to an additional 32% of outstanding shares of Grupo Aeromexico (GRPAF).
By Rachel Graf ,

NEW YORK (TheStreet) -- Delta Air Lines (DAL) - Get Report stock is lower by 0.32% to $47.60 in after-hours trading on Wednesday, after the company announced its intention to acquire as much as an additional 32% of outstanding shares of Grupo Aeromexico (GRPAF) for 43.49 pesos per share. 

Delta currently owns 4.1% of the company, and could purchase an additional 8.1%, according to a statement. 

The Delta pension trust could purchase an additional 4.6%.

Should the deal be completed, Delta and the Delta pension trust would collectively own as much as 49% of outstanding shares of Grupo Aeromexico.

"This new investment demonstrates Delta's confidence in Mexico's future and deepens our relationship with Aeromexico, cementing Delta's long-term commitment to the customers we serve to, from and through Latin America," Delta President Ed Bastian said in a statement. 

Based in Atlanta, Delta Air Lines provides scheduled air transportation for passengers and cargo throughout the United States and around the world.

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

We rate DELTA AIR LINES INC (DAL) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its increase in net income, solid stock price performance, growth in earnings per share, largely solid financial position with reasonable debt levels by most measures and good cash flow from operations. We feel its strengths outweigh the fact that the company shows low profit margins.

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

  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Airlines industry. The net income increased by 268.3% when compared to the same quarter one year prior, rising from $357.00 million to $1,315.00 million.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. The stock's price rise over the last year has driven it to a level which is somewhat 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 reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in 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 ($4.63 versus $0.75).
  • The debt-to-equity ratio is somewhat low, currently at 0.85, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.35 is very weak and demonstrates a lack of ability to pay short-term obligations.
  • Net operating cash flow has significantly increased by 52.20% to $2,067.00 million when compared to the same quarter last year. Despite an increase in cash flow of 52.20%, DELTA AIR LINES INC is still growing at a significantly lower rate than the industry average of 136.48%.
  • You can view the full analysis from the report here: DAL

Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.

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