"The message from management (and reaffirmed by its financial metrics) is that Delta is delivering on its goals which are a balanced approach to managing costs, applying discipline to capital allocations, and pursuing shareholder-friendly initiatives," analysts said after attending the airline's Investor Day yesterday in New York.
"Given the recent decrease in the price of fuel and better-than-expected revenue trends, we are raising our December Q 2014 EPS estimate to 72 cents (vs. consensus of 69 cents) from 63 cents and subsequently our FY 2014 EPS forecast to $3.30 (vs.consensus of $3.26) from $3.20," analysts added.
Similarly, Credit Suisse raised its price target on the stock to $63 from $56 today, maintaining an "outperform" rating, echoing that management reassured investors on pricing and capacity discipline in a lower fuel environment.
Notably, Delta led a rally in the U.S. industry yesterday as the company projected a $1.7 billion fuel benefit even after accounting for hedging losses, Bloomberg reported.
The Bloomberg U.S. Airlines Index closed up 2.6% yesterday, the sixth gain in seven trading sessions, on a day when crude oil fell to its lowest settlement price since July 2009.
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 68.12%, 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 30.4%. 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 -5.21%.
- 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