NEW YORK (TheStreet) -- Delta Air Lines (DAL) - Get Report shares are up 2.18% to $45.86 in trading on Monday as the airline benefits from oil prices that are declining for the second straight session today.
Concerns that a deal between Iran and six of the world's largest economies over Iran's nuclear enrichment program is imminent have sent oil prices down the last two sessions as an agreement would signal an end to sanctions against the country that would lead to an even larger supply of oil on the market.
Also putting pressure on energy futures today is a strengthening dollar that is rising against the euro on concerns that Greece may not reach an agreement on aid before it runs out of money three weeks from now, according to CNBC.
Industry standard Brent crude for May delivery is down 1.49% to $55.57 per barrel, while West Texas crude for May delivery is also dropping, down 1.17% to $48.30, as oil prices declined today for the second straight session.
Separately, Argus initiated Delta with a "buy" rating and a $55 price target with analyst John Staszak saying, "The company is benefiting from strong industry fundamentals, including low fuel costs, reduced industry capacity, and rising demand for both domestic and international air travel. It is also upgrading its fleet with new, fuel-efficient aircraft, and expects to receive $100 million in profits from the sale of older planes in 2015. In addition, Delta is adding to its route network and expanding globally through partnerships with international carriers."
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