NEW YORK (TheStreet) -- Delta Air Lines (DAL) was rising 3.83% to $32.26 on Tuesday after the company reported higher-than-expected fourth quarter profits.
Delta, now the third-largest U.S. airline behind American Airlines Group (AAL) and United Continental Holdings (UAL), used lower fuel costs and higher fares to achieve a fourth-quarter net income of $8.5 billion, or $9.89 a share. That included a non-cash gain of $8 billion from a tax benefit. After excluding items such as the tax benefit, Delta posted a profit of $558 million, or 65 cents a share, compared with the average analyst estimate of 63 cents, according to Thomson Reuters I/B/E/S. In the same period one year earlier, Delta had a profit of $7 million, or one cent a share.
Quarterly revenue increased 6% to $9.08 billion, compared to analysts' target of $9.04 billion. Delta's yield, which measures the average airfare paid per mile flown, rose 4% to 17.05 cents. Operating expenses rose 2% but costs of aircraft fuel and related taxes dropped 7%. Passenger revenue rose 9% in the United States, 18.5% in Latin America and 1.9% in Europe in the fourth quarter but fell 1.6% in the Pacific sector.
Delta topped estimates and projected strong growth for 2014, but the company has faced some questions on its Seattle hub buildup.
TheStreet Ratings team rates Delta Air Lines 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 multiple strengths, 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."