Here's Why Delta Air (DAL) Stock is Falling Today
NEW YORK (TheStreet) -- Delta Air Lines (DAL) - Get Report stock is down 0.26% to $50.50 in early afternoon trading on Tuesday after the Department of Justice filed an antitrust lawsuit to block United Continental Holdings (UAL) acquisition of 24 Delta slots at Newark International Airport.
In June, Delta agreed to trade the slots, or the right to land or takeoff an airplane at a particular time, at the New Jersey airport for United Continental's slots at New York's John F. Kennedy International Airport.
"This transaction will reduce competition by removing from the hands of a competitor — in this case Delta — a scarce resource that it needs to compete with United at Newark," Assistant Attorney General Bill Baer said in a statement.
Delta's share of Newark slots would decline to 3%, or 40 slots, if the transaction went through.
The lawsuit is not related to Delta's acquisition of United Continental's JFK airport slots, which the company began to use on November 1, Reuters reports.
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 solid stock price performance, increase in net income, 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 has had somewhat disappointing return on equity.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- 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. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- 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.
- 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, DELTA AIR LINES INC's cash flow growth rate is still lower than the industry average growth rate of 92.12%.
- 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.