Delta reported second-quarter non-GAAP earnings of $2.35 per share, beating analysts' estimates by 7 cents per share and growing 32% year-over-year. Revenue of $12.5 billion was in-line with expectations.
Mostly in-line results with better-than-expected profit may be enough of a pass for a stock like Delta, given that the stock trades at less than 10 times earnings. Perhaps some bulls feel this mild reaction isn't enough, though.
Management approved a 15% increase to the dividend, so Delta stock now yields almost 2.7%. Further, they increased their full-year guidance range to between $6.75 and $7.25 per share. That's slightly ahead of consensus estimates between $6.90 and $6.97 per share.
Overall, it was a solid quarter, while a dividend hike and guidance boost are even better. The third quarter is off to a solid start, too, with Delta President Glen Hauenstein saying, "Our third quarter is off to a great start with a new highest revenue day on record on July 7."
Trading Delta Stock
The setup in Delta stock is relatively straight-forward: Shares need to stay above $58. This is the mark that Delta stock broke out over at the start of this month and it's key for shares to now stay above it.
It's very healthy when prior resistance turns into current support, paving the way for a higher share price. In the case of Delta stock, it helps that it also has uptrends in play, too. Unfortunately, the closest is the 20-day moving average, which is near $57.50 now. Allowing these trends to "catch up" to DAL stock may set up buy-the-dip opportunities in the future -- assuming that prior resistance acts as support.
Don't think $58 was only resistance in April and May, either. This level has been in effect for 18 months, as you can see below. In November, Delta stock briefly breached this level, running up to $60.53.
Shares temporarily took out this level in Thursday morning trade, but have since pulled back.
Here's what investors need to watch now.
If DAL stock can push through its prior highs near $60.50, it can open the gate to higher prices. If it can't penetrate this level, look for a pullback into the $58 to $59 area. If it holds as support, Delta stock may present a buying opportunity.
This article is commentary by an independent contributor. At the time of publication, the author had no positions in the stocks mentioned.