Delta Air shares gain the most in a week on Thursday, quarterly adjusted earnings top estimates supported by higher fares

July 12, 2019 9:21 am

Delta Air Lines Inc’s quarterly adjusted earnings, reported on Thursday, exceeded Wall Street estimates, as benefits were drawn from higher fares.

Delta Air shares closed higher for a second consecutive trading session in New York on Thursday. It has also been the sharpest daily surge since July 2nd. The stock went up 1.16% ($0.69) to $60.16, after touching an intraday high at $60.79, or a price level not seen since December 3rd 2018 ($61.07).

Shares of Delta Air Lines Inc have risen 20.56% so far in 2019 compared with a 19.67% gain for the benchmark index, S&P 500 (SPX).

In 2018, Delta Air’s stock went down 10.89%, thus, it underperformed the S&P 500, which registered a 6.24% loss.

Total adjusted operating revenue, excluding refinery sales, went up 8.7% year-on-year to $12.54 billion during the quarter ended on June 30th, fueled by a 10% surge in premium product ticket revenue and double-digit percentage growth in loyalty and third-party maintenance revenue.

Net income attributable to shareholders increased to $1.44 billion ($2.21 per share) during the quarter ended on June 30th from $1.04 billion ($1.49 per share) in the same period a year ago.

Earnings per share, which exclude special items, were reported at $2.35 during the latest quarter. The figure compares with a consensus of estimates pointing to adjusted earnings of $2.28 per share.

The second-largest air carrier in the United States said that it had generated $3.3 billion of operating cash flow and $1.8 billion of free cash flow during the past quarter, after investing as much as $1.4 billion in the business (mostly for plane purchases and improvements).

Meanwhile, the company returned $497 million to shareholders during the quarter, including share repurchases of $268 million and dividends of $229 million.

Delta Air also revised up its full-year 2019 earnings forecast to a range of $6.75 to $7.25 per share from a range of $6.00 to $7.00 per share, as expected previously.

“With record passenger loads, customer satisfaction and $1 billion in revenue growth for the June quarter, demand for Delta’s customer-focused product and service has never been stronger. Our third quarter is off to a great start with a new highest revenue day on record on July 7th,” Glen Hauenstein, Delta Air’s President, said in a statement.

“We now expect revenue growth of six to seven percent for the year, a $3 billion increase over 2018, as we benefit from our multi-year pipeline of fleet, product, and loyalty initiatives,” Hauenstein also said.

Analyst stock price forecast and recommendation

According to CNN Money, the 20 analysts, offering 12-month forecasts regarding Delta Air’s stock price, have a median target of $70.00, with a high estimate of $90.00 and a low estimate of $60.00. The median estimate represents a 16.36% upside compared to the closing price of $60.16 on July 11th.

The same media also reported that at least 13 out of 22 surveyed investment analysts had rated Delta Air’s stock as “Buy”, while 7 – as “Hold”.

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