Delta Air Lines (DAL): Evaluating Current Valuation as Shares Jump on Fresh Earnings Beat

Delta Air Lines (DAL) shares are up just over 5% in today's session. Investors seem to be gauging what is next for the airline as travel demand and operational factors continue to shape the outlook for the stock.

See our latest analysis for Delta Air Lines.

Today’s 5% share price gain comes after a stretch where momentum was starting to fade, with Delta underperforming over the past year and a total shareholder return of nearly -5%. However, the three-year and five-year total returns of around 80% and 72% show just how much the stock has rewarded longer-term holders. Near-term movement has been choppy, and sentiment shifts on travel recovery and operational costs continue to influence the outlook.

If Delta’s move has you curious about what else is trending in the transportation sector, now’s your chance to discover See the full list for free.

With shares still trading more than 20% below analyst targets and fundamentals that suggest some embedded value, the question is whether the market is underestimating Delta’s next leg of growth or if future gains are already built in.

Most Popular Narrative: 2% Undervalued

Delta’s most widely-followed narrative suggests its fair value sits just above the current share price, hinting at modest upside from here. The estimate comes after a fresh earnings beat, so expectations have shifted quickly for this industry leader.

Wowsers! With today's trading update on Q2, Delta has smashed all expectations. In a time of year when many others are struggling to turn a profit and reaping the bulk of their earnings over the summer and the Holidays towards the end of the year, the guys from Atlanta achieved a whopping 2.7 cents of gross profit per available seat mile (with total revenue per ASM at 21.4 cents and total cost per ASM at 18.7 cents). Small wonder the shares pop by over 10 per cent pre market.

Read the complete narrative.

Want to unlock the story behind this eye-catching valuation? The narrative’s forecast hinges on freshly-revised profit projections and a profit multiple that reflects post-earnings momentum. Curious which sharp financial assumptions are behind the final number? Find out what’s fueling the new calculation and what could surprise investors next.

Result: Fair Value of $59.84 (UNDERVALUED)

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

However, any sudden economic shocks or further declines in travel demand could quickly challenge the current optimistic outlook for Delta’s share price.

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

Build Your Own Delta Air Lines Narrative

If you see the numbers differently or want to chart your own path, it’s easy to build your personal take in just a few minutes with Do it your way.

A great starting point for your Delta Air Lines research is our analysis highlighting 3 key rewards and 2 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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