Delta revenue will grow as consumers look for travel and experiences

0
9

Delta Airlines (DAL) is preparing to publish fourth-quarter results early Friday after raising expectations for the fourth quarter and giving an optimistic outlook for 2023 in mid-December, reflecting strong travel demand. DAL shares rose for a fifth straight day on Tuesday.




X



In late 2022, Delta and other airlines sounded optimistic about the continued recovery in demand for commercial travel. In contrast, companies in other sectors warned of the coming recession risk.

Amid higher inflation, consumers are “prioritizing investing in themselves and experience,” Delta CEO Ed Bastian told TBEN in December. Airlines and the wider travel industry are expected to benefit from this trend.

Delta revenue will kick off quarterly results for airlines and the overall travel industry.


IBD Live: a new tool for daily stock market analysis


Delta Air Lines earnings

estimates: Analysts polled by FactSet expect Delta’s earnings to skyrocket 495% year over year to $1.31 per share. That would be lower than the company’s upwardly revised guidance given on December 14, 2022 for Q4 EPS of $1.35 to $1.40 per share. Total revenue grows nearly 35% to $12.737 billion. But that would mark the sixth consecutive quarter of slowing revenue growth.

ALSO READ  North America's largest electricity sources by state and province

Results: Come back on Friday before the market opens.

Outlook: Analysts predict Delta’s earnings per share will rise nearly 69% to $5.09 in 2023. They see revenue up 8% to $58.803 billion next year.

Their earnings expectations are at the lower end of corporate guidance. On Dec. 14, Delta Air Lines led 2023 earnings to nearly double to $5-$6 per share.

In 2023, Delta also expects to generate more than $2 billion in free cash flow as it looks to continue paying down debt.

DAL stock

Shares of Delta Air Lines rose 3.6% to 38.09 during Tuesday’s stock market action. DAL stocks extended a rally that took stocks above the 50-day and 200-day moving averages to their best levels since June 2022.

ALSO READ  Amazon stock to move past consensus in Q4

DAL stock now expands from any early entry. Stocks are now building to the right of a deep cup base with a buy point of 46.37.

United Airlines (UAL) soared 5.5% on Tuesday, also rising for the fifth consecutive session after retaking key averages. Southwest airlines (LUV) climbed 1.7%, below key averages after holiday travel chaos stranded passengers and left the carrier with a black eye.

United will announce the results on January 17 after market close. Southwest follows on January 26 before the market opens.

Aviation Stocks: Delta’s Recovery

As with other airlines during the Covid-19 pandemic, Delta Air Lines recorded a series of losses. Delta earned $1.70 per share in the fourth quarter of 2019 before posting six straight unprofitable quarters. Sales fell by more than 60% in 2020.

Delta is expected to return to annual earnings growth in 2022. Both leisure and business travel continue to recover, the airline said last fall. International travel, especially to Europe, has been particularly strong, it added.

ALSO READ  2 Big problems weigh on Microsoft over revenue

Airlines are generally positive about the demand for travel. But some airline stock analysts are concerned about price increases — including airline tickets — as recession risk mounts.

The carriers also face higher fuel costs and a shortage of pilots. They have cut some routes and scaled back capacity expansion, while supply constraints have delayed the delivery of new aircraft.

The U.S. airline industry returned to profitability in 2022 as post-pandemic travel rebounded, culminating in a busy summer travel season.

YOU MAY ALSO LIKE THIS:

Here are the 5 best stocks to buy and watch right now

Stocks to watch: top rated IPOs, big caps and growth stocks

Find the latest stocks in buy zones with MarketSmith