Delta Air Lines (DAL) Stock Gains Despite Lower Q3 Guidance

NEW YORK (TheStreet) -- Delta Air Lines (DAL)  stock was rising 5.27% to $38.26 after the company issued updated guidance for the 2016 third quarter at Cowen's Annual Global Transportation Conference on Wednesday.

Due to the three-day computer failure in early August, Atlanta-based Delta said that it would lose $150 million in pre-tax income in the third quarter, according to a company presentation.

Additionally, Delta expects passenger revenue per available seat mile to fall by 7% year-over-year for the quarter, lower than prior estimates of a 4% to 6% decline.

One point of unit revenue decline is attributed to last month's technology outage, but the company added that performance has improved as it implements fall capacity reductions.

Delta noted that it is on track to post a 18% to 19% operating margin and roughly $1.5 billion of operating cash flow in the quarter, "despite headwinds from operational disruption, volatile fuel prices, and continued unit revenue weakness."

The company previously expected an operating margin of 19% to 21% for the quarter.

Separately, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author.

TheStreet Ratings rated this stock as a "buy" with a ratings score of B.

The company's strengths can be seen in multiple areas, such as its growth in earnings per share, increase in net income, good cash flow from operations, largely solid financial position with reasonable debt levels by most measures and notable return on equity. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself.

You can view the full analysis from the report here: DAL


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