Delta Air Lines (NYSE:DAL) stock falls 3.0% in past week as three-year earnings and shareholder returns continue downward trend

Published
July 05, 2022
NYSE:DAL
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Many investors define successful investing as beating the market average over the long term. But if you try your hand at stock picking, your risk returning less than the market. We regret to report that long term Delta Air Lines, Inc. (NYSE:DAL) shareholders have had that experience, with the share price dropping 50% in three years, versus a market return of about 33%. And more recent buyers are having a tough time too, with a drop of 33% in the last year. Furthermore, it's down 24% in about a quarter. That's not much fun for holders. But this could be related to the weak market, which is down 17% in the same period.

Since Delta Air Lines has shed US$590m from its value in the past 7 days, let's see if the longer term decline has been driven by the business' economics.

See our latest analysis for Delta Air Lines

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).

Delta Air Lines became profitable within the last five years. We would usually expect to see the share price rise as a result. So it's worth looking at other metrics to try to understand the share price move.

We think that the revenue decline over three years, at a rate of 26% per year, probably had some shareholders looking to sell. After all, if revenue keeps shrinking, it may be difficult to find earnings growth in the future.

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

earnings-and-revenue-growth
NYSE:DAL Earnings and Revenue Growth July 5th 2022

It's probably worth noting we've seen significant insider buying in the last quarter, which we consider a positive. On the other hand, we think the revenue and earnings trends are much more meaningful measures of the business. So we recommend checking out this free report showing consensus forecasts

A Different Perspective

While the broader market lost about 18% in the twelve months, Delta Air Lines shareholders did even worse, losing 33%. However, it could simply be that the share price has been impacted by broader market jitters. It might be worth keeping an eye on the fundamentals, in case there's a good opportunity. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 7% over the last half decade. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. It's always interesting to track share price performance over the longer term. But to understand Delta Air Lines better, we need to consider many other factors. For instance, we've identified 4 warning signs for Delta Air Lines (1 is a bit unpleasant) that you should be aware of.

Delta Air Lines is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.

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