One Reason Delta Air Lines (DAL) Stock Is Climbing Today

NEW YORK (TheStreet) -- Shares of Delta Air Lines (DAL) are climbing, higher by 1.34% to $47.04 in midday trading Friday, adding to its gain after airline stocks hit their highest levels in almost 14 years yesterday, following higher earnings estimates for six U.S. carriers by JPMorgan Chase analysts, Bloomberg reports.

Analysts at the firm said they believe shares of the airlines are undervalued and increased its price targets.

JPMorgan Chase raised its price target on Delta shares to $73 from $62, with an "overweight" rating.

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The firm noted that investors haven't boosted airline stocks commensurately with the "precipitous" decline in fuel prices despite higher domestic fares.

Separately, TheStreet Ratings team rates DELTA AIR LINES INC as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:

"We rate DELTA AIR LINES INC (DAL) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its solid stock price performance, revenue growth, reasonable valuation levels, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

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

  • Compared to its closing price of one year ago, DAL's share price has jumped by 52.34%, exceeding the performance of the broader market during that same time frame. 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.
  • DAL's revenue growth trails the industry average of 30.5%. Since the same quarter one year prior, revenues slightly increased by 6.5%. 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.
  • Net operating cash flow has increased to $1,358.00 million or 16.96% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -4.12%.
  • The debt-to-equity ratio is somewhat low, currently at 0.82, 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 0.45 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

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