Delta Air Lines profit expected to climb 75%

Delta Airlines (DAL) forms a cup base and is approaching a buy point. The airline title is enjoying its longest winning streak in nearly 15 years.


The Atlanta-based airline flies cargo and nearly 200 million passengers a year to 275 destinations in 50 countries.

Delta is ranked first out of 19 stocks in the Transportation-Airline group. The group is ranked 15th out of 197 IBD industry groups.

Delta Air Lines shares near buy point

Delta stock has risen for 10 straight days from Thursday and is about 3% off its 52-week high. Shares are also around 3% off the 40.30 cup basis buy point.

DAL fell 1.1% on April 13 in heavy volume after the company released its first quarter results.

The shares rose 6.2% in volume on May 17, on hopes of a resolution of the debt ceiling and the United States Federal Aviation Administration (FAA) forecast for nearly 313,000 flights for the period of seven-day Memorial Day trip.

The jump lifted the stock above its 50-day moving average to start the strong uptrend.

Strong earnings growth continues

Delta posted lower-than-expected first-quarter earnings but better-than-expected sales on April 13. Quarterly EPS of 25 cents was a big improvement from the year-ago loss of $1.23 per share.

The airline recorded a deceleration in sales growth of 36%, compared to 42% and 53% in the previous two quarters.

Delta President Glen Hauenstein said in a statement that with “record early summer bookings,” the company expects June quarter revenue to be 15% higher than 17% on capacity growth of 17% year-over-year.

Ed Bastian, CEO of Delta, expects EPS of $2 to $2.25 for the June quarter and annual EPS of $5 to $6 per share. Bastian also guided 15% to 20% full-year revenue growth.

Analysts predict impressive full-year earnings growth of 75% this year and 25% next year. Mutual funds have bolstered stocks over the past two quarters.

Follow Kimberley Koenig for more stock market news on Twitter @IBD_KKoenig.


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