DAL: Delta Air Is Soaring Above Its Recent Bad Press

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Shares of Delta Air Lines, Inc. (DAL) pulled back this week after word got out of a security flaw allowing access to online boarding passes. DAL has been one of my favorite airline stocks, but does the news change that?

Delta Air Lines’ Company Profile

delta dal stock to buyWith roots stretching back to 1929, Delta Air is one of the oldest and largest airline companies in the U.S. Delta commands a workforce of over 78,000 employees and flies 165 million passengers each year.

Delta Air offers service to 322 destinations in 59 countries. In addition to commercial airlines, Delta also operates a number of air freight companies, small package delivery services as well as capital management companies.

In the most recent fiscal year, DAL stock brought in $37.8 billion in sales and $10.5 billion in net income.

DAL Stock Sales and Earnings Outlook

Despite the security snafu, the analyst community is still pretty bullish about DAL. For the current quarter, the consensus earnings-per-share estimate has risen from $1.10 to $1.20 in the past 90 days. For the following quarter, the consensus earnings estimate has risen from 66 cents per share to 71 cents per share during that time, which translates to a solid 9.2% earnings growth and 4.9% sales growth.

For fiscal 2014, the consensus estimate has jumped from $3.22 to $3.28. All the while. Delta is expected to maintain 5% – 6% annual sales growth through the end of fiscal 2015. Beyond Delta Air’s solid sales and earnings projections, DAL remains committed to its shareholders. A few months ago, Delta Air launched a new $2 billion stock buyback program and hiked up its quarterly dividend by 50%. DAL is flush with cash, which it is using to reward shareholders. For these reasons, DAL is a good “buy” in the wake of this week’s dip.

DAL Stock’s Current Ratings

Before you buy any stock, you should always run it through my free Portfolio Grader ratings system. DAL stock has held steady at a “buy” ranking for the past 12 months running due to a one-two punch of strong institutional buying pressure (A-rated Quantitative Grade) and decent fundamentals (C-rated Fundamental Grade).

Breaking it down, Delta Air earns As on three of the eight fundamentals I graded it on: Operating margin growth, return on equity and cash flow. DAL also earns a B for analyst earnings revisions. The areas for improvement are sales growth (C), earnings growth (F), earnings surprises (C) and earnings momentum (F), but I expect these grades to firm up with Delta Air’s next earnings report.

As of this posting, I consider DAL an A-rated “strong buy.”

Louis Navellier is a renowned growth investor. He is the editor of five investing newsletters: Blue Chip GrowthEmerging GrowthUltimate GrowthFamily Trust and Platinum Growth. His most popular service, Blue Chip Growth, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.


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