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Learn more about Delta Air Lines, Inc.’s (DAL) stock grades for Value, Growth and Quality and determine whether this airlines stock meets your investment needs.
Investing in Delta Air Lines, Inc. Stock
Delta Air Lines, Inc. provides scheduled air transportation for passengers and cargo throughout the United States and across the world. The Company’s segments include Airline and Refinery. The Company has hubs and market presence in Amsterdam, London-Heathrow, Mexico City, Paris-Charles de Gaulle and Seoul-Incheon. Its airline segment is managed as a single business unit that provides scheduled air transportation for passengers and cargo throughout the United States and around the world and includes its loyalty program, as well as other ancillary airline services. Its refinery segment operates for the benefit of the airline segment by providing jet fuel to the airline segment from its own production and through jet fuel obtained through agreements with third parties. The refinery’s production consists of jet fuel, as well as non-jet fuel products. It also maintains complementary portfolio businesses, such as its cargo business and its Maintenance, Repair and Overhaul (MRO) operation.
Read on to learn how Delta Air Lines, Inc. grades on certain key metrics to see whether it meets your investment needs.
Latest Delta Air Lines, Inc. (DAL) Stock News
As of October 07, 2021, Delta Air Lines, Inc. had a $28.2 billion market capitalization, compared to the Airlines median of $2.96 billion, Delta Air Lines, Inc.’s stock is up 7.9% in 2021, down 4.4% in the previous five trading days and up 35.9% in the past year. Currently, Delta Air Lines, Inc.’s price-earnings ratio is . Delta Air Lines, Inc.’s trailing 12-month revenue is $18.3 billion with a -36.4% profit margin. Year-over-year quarterly sales growth most recently was 385.4%. Analysts expect adjusted earnings to reach $-3.927 per share for the current fiscal year. Delta Air Lines, Inc. does not currently pay a dividend.
The outlook for the airline industry is relatively negative for the next year. Although May 2021 saw airline travel reach 75% of what it was before the pandemic, most airlines are not going to achieve substantial profits due to a lack of passengers and low-ticket prices. While domestic travel has made a partial recovery, there is still a lack of demand compared to the pre-pandemic era. This is mainly due to high unemployment and foreign countries being behind the United States in terms of vaccination progress. Furthermore, the lack of business travel is unlikely to change, as most companies will wait until the pandemic is fully over to begin letting employees take work-related trips. However, this setback is only temporary as we have already seen American and Chinese firms be eager to go back to this method, suggesting that most companies will resume business travel at some point. As a result of the pandemic, new aircraft deliveries have been postponed or cancelled altogether, meaning that airlines will receive lower prices for the newest airplanes well into the future. These lower costs may allow airlines to have greater profit margins in future quarters due to the new innovations coming at lower prices.
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Grading Delta Air Lines, Inc. Stock
Stock evaluation requires access to huge amounts of data and the knowledge and time to sift through it all, making sense of financial ratios, reading income statements and analyzing recent stock movement. To help individual investors with that daunting task, AAII created A+ Investor, a robust data suite that condenses data research in an actionable and customizable way suitable for investors of all knowledge levels.
AAII’s proprietary stock grades come with A+ Investor. These offer intuitive A-F grades for each of five key investing factors: value, growth, momentum, earnings revisions and quality. Here, we’ll take a closer look at Delta Air Lines, Inc.’s stock grades for value, growth and quality.
Learn more about A+ Investor here!
Delta Air Lines, Inc.’s Value Grade
Value Grade:
| Metric | Score | DAL | Sector Median |
| Price/Sales | 32 | 1.52 | 1.72 |
| Price/Earnings | na | na | 26.4 |
| EV/EBITDA | na | na | 13.9 |
| Shareholder Yield | 43 | (0.3%) | (0.4%) |
| Price/Book Value | 95 | 21.72 | 2.78 |
| Price/Free Cash Flow | na | na | 21.8 |
Successful stock investing involves buying low and selling high, so stock valuation is an important consideration for stock selection.
Buying stocks that are going to go up typically means buying stocks that are undervalued in the first place, although momentum investors may argue that point.
AAII’s A+ Investor value grade derives from a stock’s value score. The value score is the percentile rank of the average of the percentile ranks of the price-to-sales ratio, price-earnings ratio, enterprise-value-to-EBITDA (EV/EBITDA) ratio, shareholder yield, price-to-book-value ratio and price-to-free-cash-flow ratio. The score is variable, meaning it can consider all six ratios or, should any of the six ratios not be valid, the remaining ratios that are valid. To be assigned a value score, stocks must have a valid (non-null) ratio and corresponding ranking for at least two of the six valuation ratios.
Stocks with a value score from 0 to 20 are considered deep value, those with a score between 21 and 40 are a good value and so on.
Delta Air Lines, Inc. has a Value Score of 56, which is Average.
Delta Air Lines, Inc.’s Growth Grade
Growth Grade:
| Metric | Score | DAL | Sector Median |
| Sales Growth Qtrly YoY | 98 | 385.4% | 22.2% |
| EPS Dil Cont Growth Qtrly YoY | 77 | 111.3% | 63.0% |
| Operating Cash Growth Qtrly YoY | 99 | 743.4% | (9.2%) |
| Sales Growth Rate 5yr | 7 | (15.9%) | 3.0% |
| EPS Dil Cont Growth Rate 5yr | 10 | (40.4%) | 4.9% |
| Operating Cash Growth Rate 5yr | 19 | (19.9%) | 6.4% |
Growth investing builds on the idea that stocks of companies exhibiting strong, consistent and prolonged growth outperform those of slower-growth companies. AAII measures several dimensions of growth, including year-over-year increases in sales and earnings, long(er)-term historical sales and earnings growth rates and analyst-forecasted long-term earnings growth.
The components consider a company’s success in growing its sales, earnings per share and operating cash on a year-over-year basis for the latest reported fiscal quarter and on an annualized basis over the last five years. High rates, especially compared to the sector median, lead to better scores.
Delta Air Lines, Inc. has a Growth Score of 51, which is Average.
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Delta Air Lines, Inc.’s Quality Grade
Quality Grade:
| Metric | Score | DAL | Sector Median |
| Return on Assets (ROA) | 30 | (8.9%) | 2.9% |
| Return on Invested Capital (ROIC) | na | 14.5% | |
| Gross Income to Assets | 17 | 6.2% | 22.2% |
| Buyback Yield | 64 | (0.3%) | (0.7%) |
| Change in Total Liabilities to Assets | 20 | 13.9% | 1.6% |
| Accruals to Assets | 64 | (7.1%) | (4.8%) |
| Z Double Prime Bankruptcy Risk (Z) Score | 19 | 2.11 | 5.91 |
| F-Score | 10 | 1 | 5 |
Like the value grade, AAII’s A+ Investor quality grade comes from the percentile rank of key metrics. Specifically, the quality grade is the percentile rank of the average of the percentile ranks of the return on assets (ROA), return on invested capital (ROIC), gross profit relative to assets, buyback yield, change in total liabilities to assets, accruals, Z double prime bankruptcy risk (Z) score and F-Score.
The score is variable, meaning it can consider all eight measures or, should any of the eight measures not be valid, the remaining measures that are valid. To be assigned a quality score, stocks must have a valid (non-null) measure and corresponding ranking for at least four of the eight quality measures.
The quality score is used to assess the underlying “quality” of a particular stock. A higher quality stock possesses traits associated with upside potential and reduced downside risk. Backtesting of the quality grade shows that stocks with higher quality grades, on average, outperformed stocks with lower grades over the period of 1998 through 2019.
Stocks receive better grades (higher scores) for having higher scores for the quality sub-components and worse grades (lower scores) for lower scores for the sub-components.
Delta Air Lines, Inc. has a Quality Score of 14, which is Very Weak.
Other Delta Air Lines, Inc. Grades
In addition to Value, Growth and Quality, A+ Investor also provides grades for Momentum and Estimate Revisions.
Momentum grades help uncover stocks experiencing anomalously high rates of return; research finds that stocks with high relative levels of momentum tend to outperform, whereas those with low levels of momentum tend to continue underperforming.
Earnings estimate revision scores take into account the magnitude of a company’s earnings surprise in its last two reported fiscal quarters. Often, surprises beget further surprises—or at least continued sales growth (the exact opposite is generally true, too). AAII’s stock screen that follows the companies with the highest earnings estimate revisions (i.e., the best grades) has a 23.1% backtested annual return since inception, whereas an example screen following those with the worst revisions has a backtested annual return since inception of under 5%.
These 2 key factors, when combined with the above, provide a holistic view into a particular stock. Further, by joining A+ Investor you can see whether Delta Air Lines, Inc.’s stock passes any of our 60+ stock screens that have outperformed the market since their creation.
Delta Air Lines, Inc. Stock: Bottom Line
Overall, Delta Air Lines, Inc. stock has a Value Grade of C, Growth Grade of C and Quality Grade of F.
Whether this is a good investment depends on your goals and risk tolerance. AAII can help you figure out both and identify which investments align with what works best for you.
We do so through a program of education that teaches you to invest for yourself and become an effective manager of your own wealth—no more relying on others for your financial independence. You can rely on AAII for timeless articles on financial planning and stock-picking, unbiased research and actionable analysis that makes you a better investor.
A+ Investor adds to that qualitative teaching by giving you a powerful data suite that helps you whittle down investment decisions, find stocks, exchange-traded funds (ETFs) or mutual funds that meet your needs and understand your portfolio at a more detailed level.
