Improvement in profitability and outperformance against the industry can be important characteristics in a stock for some investors. Below, I will assess Delta Air Lines, Inc.’s (NYSE:DAL) track record on a high level, to give you some insight into how the company has been performing against its historical trend and its industry peers.
Commentary On DAL’s Past Performance
DAL’s trailing twelve-month earnings (from 31 December 2019) of US$4.8b has jumped 21% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 11%, indicating the rate at which DAL is growing has accelerated. How has it been able to do this? Let’s see if it is only a result of industry tailwinds, or if Delta Air Lines has seen some company-specific growth.
In terms of returns from investment, Delta Air Lines has invested its equity funds well leading to a 31% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 7.9% exceeds the US Airlines industry of 6.6%, indicating Delta Air Lines has used its assets more efficiently. However, its return on capital (ROC), which also accounts for Delta Air Lines’s debt level, has declined over the past 3 years from 17% to 15%.
What does this mean?
While past data is useful, it doesn’t tell the whole story. While Delta Air Lines has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. I recommend you continue to research Delta Air Lines to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for DAL’s future growth? Take a look at our free research report of analyst consensus for DAL’s outlook.
- Financial Health: Are DAL’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 31 December 2019. This may not be consistent with full year annual report figures.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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