Delta Air Lines Inc Stock Hold Recommendation Reiterated (DAL)

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

NEW YORK ( TheStreet) -- Delta Air Lines (NYSE: DAL) has been reiterated by TheStreet Ratings as a hold with a ratings score of C+ . The company's strengths can be seen in multiple areas, such as its solid stock price performance and revenue growth. However, as a counter to these strengths, we also find weaknesses including poor profit margins and weak operating cash flow.

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Highlights from the ratings report include:
  • Compared to its closing price of one year ago, DAL's share price has jumped by 30.16%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 11.4%. Since the same quarter one year prior, revenues slightly increased by 2.4%. 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.
  • DELTA AIR LINES INC has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from 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 increased its bottom line by earning $1.19 versus $1.00 in the prior year. This year, the market expects an improvement in earnings ($2.60 versus $1.19).
  • The gross profit margin for DELTA AIR LINES INC is rather low; currently it is at 18.70%. It has decreased from the same quarter the previous year.
  • Net operating cash flow has significantly decreased to $550.00 million or 52.50% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.

Delta Air Lines, Inc. provides scheduled air transportation for passengers and cargo in the United States and internationally. The company operates at airports in Amsterdam, Atlanta, Cincinnati, Detroit, Memphis, Minneapolis-St. Delta Air Lines has a market cap of $13.33 billion and is part of the services sector and transportation industry. The company has a P/E ratio of 13.2, below the S&P 500 P/E ratio of 17.7. Shares are up 33.6% year to date as of the close of trading on Tuesday.

You can view the full Delta Air Lines Ratings Report or get investment ideas from our investment research center.

--Written by a member of TheStreet Ratings Staff.

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