Delta Airlines, known for its exceptional management, is expected to witness significant earnings growth in the coming years. With the stock currently priced at around $34, it appears to be an affordable investment opportunity. Trading at a multiple of six times the projected 2023 earnings of $5.50 per share, based on Delta’s recent forecast, and five times the airline’s 2024 earnings estimate of $7 per share.
The airline industry has historically left investors skeptical due to its underperformance in the stock market. However, Delta has defied these odds with a recent projection of 15% to 20% revenue growth for 2023 and an almost doubled earnings, despite incurring high costs from a new pilot contract. While some may view this as ambitious, Cowen analyst Helane Becker disagrees. Having a bullish outlook on Delta with a price target of $54, she believes that the management’s targets are conservative and attainable, unless a major recession occurs.
Furthermore, Delta is strategically utilizing its free cash flow to reduce debt accumulated during the pandemic, setting it apart from its competitor Southwest Airlines (LUV) which has reinstated its dividend. Delta also takes the lead in cabin segmentation and boasts a robust hub network with dominant positions in several of the busiest airports in the United States. The time may have finally come for Delta stock to soar to new heights.
Written by Andrew Bary
