Delta Air Lines (DAL): Assessing Valuation as Investor Focus Intensifies Ahead of Strategy Update

Delta Air Lines (DAL) is back in the spotlight this month, and for good reason. The company is gearing up to present at Morgan Stanley’s annual Laguna Conference, an event that routinely draws attention from investors looking for a glimpse into strategy and performance for the year ahead. With both Delta and its main competitors attracting renewed focus, curiosity is swirling around what Delta’s leadership will unveil and how this might shape expectations as we move closer to the last quarter of 2025.

This uptick in attention is happening alongside fresh momentum for the airline sector overall. Over the past year, Delta’s stock has delivered a 40% gain, handily outpacing many peers. Momentum has gathered pace throughout the year, including a 15% jump in the past month and over 25% across the past three months. While sector competition with low-cost carriers remains active and Delta’s near-term earnings growth trails the market, investors are clearly reengaged as they track upcoming commentary and signals from company management.

So with the recent spike in share price and a major conference just days away, should investors see Delta Air Lines as undervalued, or is the market already factoring in all the potential good news?

Most Popular Narrative: 2.6% Overvalued

The prevailing narrative on Delta Air Lines suggests shares are trading a touch above fair value, with estimates now reflecting more tempered profit expectations following updated guidance.

That said, there are two major threats to the company's prospects that should not go unnoticed. 1) As with all major US airlines, its balance sheet is somewhat strained and always at risk of sudden, exogenous shocks such as another pandemic or a trade war in North America going rogue. Margins are so thin they simply cannot accommodate any major impact, so it is important to be vigilant when investing in an airline even as large as this one. 2) The Trump administration's tariff wars threaten to weaken the US economy at least in the short to mid-term, thus reducing travel demand even more than anticipated in general and specifically on Atlantic routes, which are among the most important cash cows of the industry. That said, Delta is expected to continue performing relatively well compared to its peers, even if on a less steep trajectory.

This narrative hints at a complex valuation story. What underlying financial drivers nudge Delta just above its calculated fair value? Curious about which profit and growth dynamics keep this airline in the leadership spot, but soften the upside? Uncover what powers this modest premium and learn why investors are still watching closely for the next twist in Delta's financial runway.

Result: Fair Value of $59.84 (OVERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, turbulent global demand or a sudden shock to Delta's balance sheet could still tip the scales on current valuations.

Find out about the key risks to this Delta Air Lines narrative.

Another View: Our DCF Model

Taking a step back from market multiples, our DCF model actually suggests Delta is trading below its estimated fair value. This could indicate there is more upside than the market is currently pricing in.

Look into how the SWS DCF model arrives at its fair value.

Stay updated when valuation signals shift by adding Delta Air Lines to your watchlist or portfolio. Alternatively, explore our screener to discover other companies that fit your criteria.

Build Your Own Delta Air Lines Narrative

If you have a different perspective or want to dive into the data on your own, you can assemble your own version from start to finish in just a few minutes. Do it your way

A great starting point for your Delta Air Lines research is our analysis highlighting 2 key rewards and 3 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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