Why Delta Air Lines (DAL) Stock Is Lower Today

NEW YORK (TheStreet) -- Shares of Delta Air Lines Inc.  (DAL) are down -2.35% to $38.64 over caution about an investment grade rating for the airline, Barron's reports.

Fitch Ratings gave Alaska Air  (ALK) a triple-B-minus rating last week, and "now hopes are rising that Delta Air might be able to earn an investment-grade rating of its own," Barron's notes. The publication then cited Stifel's Joseph DeNardi who's not convinced:

Said he: "Fitch... citing the company's low financial leverage, high operating margins, healthy balance sheet, and outlook for strong free cash flow...Other airlines are likely to be in the discussion for deserving an investment grade credit rating over the next few years so we see how they stack up relative to the criteria Fitch used for its rating of Alaska-the result is others are close but Fitch points out that it is "notable" that Alaska Air did not file for bankruptcy protection during the 2000s downturns while its peers did - not a good sign, in our view, for Delta Air Lines' chances of getting an investment grade rating in the near term."

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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, reasonable valuation levels, solid stock price performance, compelling growth in net income and revenue growth. We feel these strengths outweigh the fact that the company shows weak operating cash flow."

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.
  • Powered by its strong earnings growth of 2400.00% and other important driving factors, this stock has surged by 111.98% 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.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Airlines industry. The net income increased by 2942.8% when compared to the same quarter one year prior, rising from $7.00 million to $213.00 million.
  • The revenue growth significantly trails the industry average of 44.1%. Since the same quarter one year prior, revenues slightly increased by 4.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • You can view the full analysis from the report here: DAL Ratings Report

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