Why Delta Air Lines Inc. (DAL) is Up Today

NEW YORK (TheStreet) -- Delta Air Lines Inc. (DAL) rose 2.8% to $29.59 a share on Wednesday after the airline announced it plans to spend $770 million on interior improvements for its various aircraft.

Delta announced it would spend the money through 2016 to refresh the interiors of its narrow-body craft, Boeing 757-200, 737-800, Airbus A319 and A320 airplanes. The company plans to use the money to offer power in each seat, to add new slim-line seats with adjustable headrests, to update the bathrooms on the aircraft, to add more efficient galleys and to improve other areas of passenger convenience and comfort during flight.

"We're continuing to make smart long-term investments in our products and services to meet the expectations of our customers," said Glen Hauenstein, executive vice president and Chief Revenue Officer, in a company statement. "In just six years, we will have made updated to interiors throughout Delta's fleet giving customers improved comfort and more options to work or relax and be entertained."

This move is part of a widespread program within Delta to improve its flights. All of Delta's international wide-body aircraft will include full flat-bed seats with direct-aisle access in the company's BusinessElite class by mid-2014, and all transcontinental flights will have full flat-bed seats in BusinessElite by Summer 2015. All two-class domestic aircraft currently have Wi-Fi access, and this will be expanded to Delta's entire international fleet by 2015. 

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 notable return on equity, good cash flow from operations, solid stock price performance, impressive record of earnings per share growth and revenue growth. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Compared to other companies in the Airlines industry and the overall market, DELTA AIR LINES INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly increased by 150.75% to $1,161.00 million when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 124.19%.
  • Powered by its strong earnings growth of 29.26% and other important driving factors, this stock has surged by 126.49% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, DAL should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • DELTA AIR LINES INC has improved earnings per share by 29.3% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. 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 ($3.12 versus $1.19).
  • Despite its growing revenue, the company underperformed as compared with the industry average of 15.1%. Since the same quarter one year prior, revenues slightly increased by 5.7%. Growth in the company's revenue appears to have helped boost the earnings per share.

More from Markets

NYSE Suspends Trading for Some Shares of Amazon, Alphabet

NYSE Suspends Trading for Some Shares of Amazon, Alphabet

Stocks Slide Amid a Rise in Bond Yields, Strong Earnings

Stocks Slide Amid a Rise in Bond Yields, Strong Earnings

Video: Jim Cramer Reveals Why He's Cautious on Stocks

Video: Jim Cramer Reveals Why He's Cautious on Stocks

Jim Cramer on Earnings: All Stories Aren't Equal

Jim Cramer on Earnings: All Stories Aren't Equal

4 Stocks Making Important Moves Wednesday

4 Stocks Making Important Moves Wednesday