Delta Air Lines’ earnings are up 572%, but DAL stock is falling amid poor first-quarter expectations
Delta Airlines (DAL) handily beat fourth-quarter earnings estimates on Friday, while supporting the full-year 2023 growth outlook. But DAL stock fell on weak first-quarter guidance.
Delta’s earnings kick off quarterly results for the airline and the travel industry in general. Delta Bear American Airlines Group (AAL) gave bullish guidance for the fourth quarter early Thursday. AAL stock advanced on Friday after jumping on Thursday.
Delta Air Lines earnings
estimates: Analysts polled by FactSet expect Delta’s dividend to rise 502%, year-over-year, to $1.32 per share. This would be slightly below the company’s upwardly revised guidance on December 14 for fourth quarter EPS of $1.35 to $1.40 per share. Total revenue is expected to grow by 36% to $12.919 billion. But that would mark the sixth consecutive quarter of slowing sales growth.
resultsEarnings jumped nearly 573% to $1.48 a share. Total revenue increased 42% to $13.435 billion.
IBD Live: A new tool for daily analysis of the stock market
Delta grew passenger revenue 6% to $10.89 billion, exceeding the agreed-upon target of $10.6 billion.
prospects: Delta Airlines on Friday maintained its forecast for “significant” growth in 2023, including earnings per share of $5 to $6 and free cash flow of more than $2 billion.
You expect full-year revenue growth of 15%-20%.
Analysts polled by FactSet now expect 2023 EPS to increase 64% to $5.26, at the lower end of the company’s guidance. And they see revenue for the full year growing 14.2%.
“As we move into 2023, the industry backdrop for air travel remains favorable, and Delta is well positioned for significant earnings and free cash flow growth,” CEO Ed Bastian said in the earnings release.
He added that the company is on track to achieve earnings per share of more than $7 in 2024.
But Chief Financial Officer Dan Janke tempered expectations for a start in 2023.
“For the March quarter, we expect non-fuel unit costs to increase 3% to 4% year-over-year, including the effect of a full quarter from the labor cost increase and the completion of our network rebuild in the peak summer period,” he said.
Based on that forecast, Delta guided first-quarter earnings down 15 cents — 40 cents. Wall Street now expects 59 cents.
Delta Airlines shares fell 3.5 percent to 38.23 on Friday The work of the stock market, closing near session highs. DAL stock snapped a seven-day rally that lifted shares above the 50-day and 200-day moving averages, to the best level since June 2022.
DAL stock builds the right side of a deep cupholder using a 46.37 Point purchase.
American Airlines Handbook
Early Thursday, America raised fourth-quarter guidance, citing strong demand and rising airfares. The airline now expects revenue to rise 16%-17% from the fourth quarter of 2019. This is up from previous guidance of 11%-13%. It expects revenue per available seat mile to jump 24% compared to 2019 versus a previous forecast of 18%-20%.
The carrier now expects earnings per share of $1.12 to $1.17. This is up from 50 cents to 70 cents previously. The analyst consensus is targeting 61 cents, according to FactSet.
The company is scheduled to announce the results on January 26.
AAL stock rose 1.1% on Friday, after rising 9.7% on Thursday. Stocks rallied sharply from their late-December low and posted a third straight weekly advance. On Tuesday, the airline’s stock regained support at its 200-day moving average for the first time since May.
United Airlines (UAL) rose 0.8% on Friday, extending a seven-day winning streak. Southwest Airlines (luv) rose 0.1%, still below major averages after holiday travel chaos left passengers stranded and gave the airline a black eye.
United is scheduled to report earnings on January 17, after the market closes. Southwest is scheduled to follow Jan. 26 before the market opens.
Airline Stocks: Delta’s Rebound
In late 2022, Delta and other airlines appeared optimistic about a sustained recovery in demand for commercial travel. In contrast, companies in other industries have warned of upcoming recession risks.
“Consumers prioritize investing in themselves and the experience,” Delta CEO Ed Bastian said in the midst of rising inflation. CNBC in December. Airlines and the broader travel industry are expected to capitalize on this trend in favor of product experiences.
As with other airlines throughout the Covid-19 pandemic, Delta Air Lines has posted a string of losses. Delta earned $1.70 per share in the fourth quarter of 2019 before posting six consecutive unprofitable earnings quarters. Revenue fell more than 60% in 2020.
Delta is expected to return to annual profit growth in 2022. The airline said last fall that leisure and business travel continues to recover. She added that international travel, particularly to Europe, has been particularly strong.
Airlines have been broadly optimistic about travel demand. But some airline stock analysts worry about price increases — including for airfare — as recession risks mount.
Carriers also face rising fuel costs and a shortage of pilots. They cut some routes and curtailed capacity expansion, while supply constraints delayed deliveries of the new aircraft.
The US airline industry returned to profitability in 2022 with a post-pandemic travel recovery, highlighted by the busy summer travel season.
You may also like:
These are the top 5 stocks you can buy and watch right now
Stocks to watch: Top-rated IPOs, large caps and growth stocks
Find the latest stocks to hit the buy zone with MarketSmith
past resistance to the market breakout; Painful Tesla transmission