Delta Air (DAL) Stock Rises as Negative Impact From Greek Debt Crisis Appears Limited

NEW YORK (TheStreet) -- Delta Air Lines (DAL) shares are up 0.16% to $41.19 in trading on Tuesday, recovering from Monday's 4.41% decline, following a note from Raymond James analyst Savanthi Syth reassuring investors that the Greek debt crisis will not affect the airline industry.

"In general Greece is likely to have very little negative impact on profits as it is primarily a tourist destination, is not a significant driver of demand, and accounts for a relatively small portion of overall capacity," said Syth, according to Barron's.

"Greece is primarily a tourist destination, particularly for passengers from the U.K., Germany, and Italy, and does not drive much local demand. Moreover, Greece accounts for a very small portion of overall capacity for the airlines under coverage...it accounts for 3% or less of European airline overall seat capacity and 1% or less of North American airlines' international seat capacity," he continued.

American Airlines (AAL) and United Continental  (UAL) are also gaining in trading today.

The European Central Bank said Sunday that it will provide no new emergency support for Greek banks after the country's government decided to pull out of negotiations on Friday.

Greek officials said that banks will remain closed through July 6 with withdrawals limited to 60 euros per day.

The Greek stock exchange is closed until July 6.

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 revenue growth, good cash flow from operations, solid stock price performance, growth in earnings per share and increase in net income. We feel its strengths outweigh the fact that the company has had somewhat disappointing return on equity."

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

  • DAL's revenue growth has slightly outpaced the industry average of 3.0%. Since the same quarter one year prior, revenues slightly increased by 5.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • DELTA AIR LINES INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, DELTA AIR LINES INC reported lower earnings of $0.75 versus $12.29 in the prior year. This year, the market expects an improvement in earnings ($4.42 versus $0.75).
  • Net operating cash flow has significantly increased by 72.02% to $1,636.00 million when compared to the same quarter last year. Despite an increase in cash flow, DELTA AIR LINES INC's average is still marginally south of the industry average growth rate of 74.81%.
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Airlines industry average, but is greater than that of the S&P 500. The net income increased by 250.2% when compared to the same quarter one year prior, rising from $213.00 million to $746.00 million.
  • You can view the full analysis from the report here: DAL Ratings Report

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