Delta Air Lines (DAL): Is the Stock Undervalued After Recent Share Price Pullback?

Delta Air Lines (DAL) shares have seen movement recently, with investors analyzing how the company’s business is performing. While the broader airline industry has faced challenges, Delta’s long-term returns are putting its current valuation in focus.

See our latest analysis for Delta Air Lines.

Delta's share price has pulled back to $55.97, with a sharp 10.19% drop over the last month as sentiment cooled following earlier gains. Its impressive three-year total shareholder return of nearly 67% shows that the long-term growth story is intact. Momentum has faded recently, but the stock’s bigger picture remains compelling for patient investors.

If this shift in momentum has you interested in what else is unfolding within the sector, now is the perfect chance to explore See the full list for free.

With shares now trading well below recent highs, investors have to ask themselves: is Delta currently undervalued and offering a fresh entry point, or has the market already priced in all of the airline’s future growth prospects?

Most Popular Narrative: 6.5% Undervalued

Delta’s narrative points to a fair value of $59.84, modestly above the latest share price of $55.97. Key assumptions about profit margins and future multiples are at the heart of this estimate, making it vital to look at how the company’s operating performance ties in with valuation.

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, 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.

Curious how a sharp profit surprise can drive up a stock’s story? The narrative’s price target is powered by unexpectedly strong operating results and a lowered future profit multiple. Which one matters most in the calculation? Dig deeper to see the exact moves that keep this valuation on the runway.

Result: Fair Value of $59.84 (UNDERVALUED)

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

However, sudden shocks such as new trade disputes or weakening travel demand could quickly challenge Delta’s current industry lead and future profit outlook.

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

Build Your Own Delta Air Lines Narrative

Keep in mind, if you have a different take or want to dive into the numbers yourself, you can easily put together your own narrative in just a few minutes. 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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