NEW YORK (TheStreet) -- Delta Air Lines (DAL) was falling -4.7% to $39.01 Wednesday after reporting traffic for August and lowering its third-quarter passenger revenue per available seat mile (PRASM) guidance.
The airline announced that PRASM grew 2% year-over-year for the month of August. The increase was due to continued strength in the U.S., which helped offset a point of negative pressure due to events in Russia, the Middle East, and Africa.
Delta said it now expects to report PRASM to grow between 2% and 3% in the third quarter, down from its previous guidance of an increase of between 2% and 4%.
The airline reported a monthly completion factor of 99.6% and an on-time arrival rate of 84.3% for the month of August.
Must Read: 50 Stocks Hedge Funds Love
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, attractive valuation levels, solid stock price performance, revenue growth and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company shows low profit margins."
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.
- Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 108.52% over the past year, a rise that has exceeded that of the S&P 500 Index. 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 revenue growth significantly trails the industry average of 48.4%. Since the same quarter one year prior, revenues slightly increased by 9.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The debt-to-equity ratio is somewhat low, currently at 0.85, 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 0.41 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
EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he and Stephanie Link think could be potentially HUGE winners. Click here to see the holdings for FREE.