Why You Should Retain Delta Airlines (DAL) Stock For Now
Zacks Investment Research | Jun 14, 2017 09:15PM ET
Delta Air Lines, Inc. (NYSE:DAL) , based in Atlanta, GA, posted impressive traffic results for the month of May. Consolidated traffic – measured in revenue passenger miles (RPMs) – came in at 19.14 billion, up 1.7% year over year.
Passenger revenue per available seat miles (PRASM: a measure of unit revenue) increased 3.5% on a year-over-year basis in May 2017. This strong PRASM performance in May implies that Delta is on track to achieve second-quarter guidance with respect to the metric. The metric is expected to be on the upper end of the 1--3% range in the said quarter.
The company’s efforts to enhance shareholders’ wealth through dividends and share buybacks are also appreciative. At a meeting with analysts in May 2017, Delta announced that the board of directors has approved a new share repurchase program worth $5 billion. Simultaneously, the company has expanded the quarterly dividend by over 50% to $0.305 per share.
In sync with the objective of maintaining capacity discipline, the carrier has put the cap on 2017 system capacity growth at 1%. Delta is well on track to achieve targets in the 2018–2020 time frame like operating margin in the band of 16–18% and earnings per share growth in excess of 15%. The carrier expects the operating margin to emerge in the upper half of the 17--19% range in second quarter.
The carriers’ expansion efforts also raise optimism. Delta began flight service between Hartsfield-Jackson Atlanta International Airport and Seoul-Incheon International Airport on Jun 3. The service offers more options to passengers flying to and from Asia alongside a greater cargo capacity between the U.S. and South Korea.
This apart, Delta and the Mexican counterpart Grupo Aeromexico signed a joint cooperation agreement on Jun 6 to boost their cargo operations across the United States and Mexico.
Delta’s employee-friendly approach appears impressive as well. In Feb 2017, the carrier has paid over $1 billion to its employees as part of the company’s profit-sharing plan for 2016. It stated that it has paid almost $5 billion to the employees through profit-sharing scheme during the past five years. Efforts to reduce the debt levels also raise optimism.
Driven by the above bullish factors, shares of Delta have outperformed the Zacks categorized Original post
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.