NEW YORK (TheStreet) -- Shares of Delta Air Lines Inc (DAL) - Get Reportwere stalling, down 0.59% to $43.84 in early market trading Monday, after the carrier announced it is investing in China Eastern Airlines Corp(CEA) - Get Report.
Delta, the world's third-biggest airline, will take a 3.55% stake for $450 million to expand their strategic partnership that allows both carriers to better compete on routes between the U.S. and China, according to Bloomberg.
Delta will acquire about 10% of China Eastern's H-shares, which are listed in Hong Kong, The Wall Street Journal reports.
Atlanta, Ga.-based Delta Air Lines provides scheduled air transportation for passengers and cargo through its route network, centered around the hub system it operates at airports worldwide.
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 revenue growth, expanding profit margins, good cash flow from operations, increase in net income and largely solid financial position with reasonable debt levels by most measures. 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:
- DAL's revenue growth has slightly outpaced the industry average of 3.1%. Since the same quarter one year prior, revenues slightly increased by 0.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
- 36.57% is the gross profit margin for DELTA AIR LINES INC which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 13.86% is above that of the industry average.
- Net operating cash flow has increased to $2,745.00 million or 33.51% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 1.48%.
- The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Airlines industry average. The net income increased by 85.4% when compared to the same quarter one year prior, rising from $801.00 million to $1,485.00 million.
- The debt-to-equity ratio is somewhat low, currently at 0.97, 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 0.34 is very weak and demonstrates a lack of ability to pay short-term obligations.
- You can view the full analysis from the report here: DAL Ratings Report