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Why Are Airline Stocks Outperforming Today

  • Airline stocks are outperforming after Delta’s (DAL) preliminary Q3 results appear to have pleased the market.
  • The company generated record revenue last quarter.
  • The airline’s Q4 EPS guidance came in well above analysts’ average outlook.
airline stocks - Why Are Airline Stocks Outperforming Today

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Airline stocks are outperforming amid today’s equities selloff after Delta’s (NYSE:DAL) preliminary third-quarter results appear to have pleased the Street and increased confidence in the airline sector. DAL stock, along with JetBlue (NASDAQ:JBLU) stock, are both climbing over 2% in early trading, while American Airlines (NASDAQ:AAL), Southwest Airlines (NYSE:LUV), and United Airlines (NASDAQ:UAL) are all rising by less than 2%.

Also worth noting is that airline stocks are trending on social media this morning.

Delta’s Preliminary Third-Quarter Results

Delta’s Q3 top line came in at a record level of nearly $14 billion. And importantly, its sales were 5%-9% above those in Q2 of 2019, before the coronavirus pandemic began, the airlines reported. On the bottom line, Delta generated a net income of $695 million, well below the $1.5 billion of earnings that it reported in Q2 of 2019.

Delta’s earnings per share last quarter, excluding some items, came in at $1.51, versus analysts’ average outlook of $1.53. But the company provided Q4 earnings per share (EPS) guidance of $1-$1.25, versus analysts’ average estimate of just 80 cents.

The airline is flying significantly fewer planes per day now than it did in 2019, while cost pressures have greatly increased for nearly all companies, and jet fuel prices were significantly higher last quarter than in Q3 of 2019.

The devastation wrought by Hurricane Ian also lowered Delta’s Q3 revenue by $35 million.

The Airline Sector Is Strong

“The travel recovery continues as consumer spend shifts to experiences and demand improves in corporate and international,” Delta CEO Ed Bastian reported in a statement.

Calling consumers “relatively healthy,” the CEO was bullish on Delta’s Q4 outlook.

DAL stock is down just 2% over the last three months.

On the date of publication, Larry Ramer did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Larry Ramer has conducted research and written articles on U.S. stocks for 15 years. He has been employed by The Fly and Israel’s largest business newspaper, Globes. Larry began writing columns for InvestorPlace in 2015. Among his highly successful, contrarian picks have been PLUG, XOM and solar stocks. You can reach him on Stocktwits at @larryramer.


Article printed from InvestorPlace Media, https://investorplace.com/2022/10/why-are-airline-stocks-outperforming-today/.

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