The company also cut its planned August flight additions in half amid surging coronavirus cases.
Returns as of 10/22/2020. But it's tough to forecast clear skies ahead. The airlines were much more resilient going into this crisis than they’ve been in prior major downturns. The company is "parking more than 650 aircraft," and is "instituting a companywide hiring freeze and offering voluntary leave options with 37,000 employees taking short-term unpaid leave.". Air travel may be slowly returning. Delta expresses the amount of price change a derivative will see based on the price of the underlying security (e.g., stock). Revenue was better than expected but still plunged 88% to $1.47 billion. But DAL stock pulled back sharply after that amid new coronavirus fears, hitting a low of 24.38. Start With These 3 Steps, Best Growth Stocks To Buy And Watch: See Updates To IBD Stock Lists, IBD Digital: Unlock IBD's Premium Stock Lists, Tools And Analysis Today. And, given consumers on average have said they’ll wait another 7.5 months before hopping on a plane, that may be enough to ride out near-term depressed air travel levels. In short, it’s still too early to tell whether Buffett sold at the bottom, or if airline stocks could fall further if tough times continue. Buffett then added more than five million Delta shares in 2019.

But, with flights no more than 60% full, profitability will remain a challenge. Travel demand may be slowly bouncing back. This shows us where strength may return when buyers come back to the market. was off 0.4%. With airline shares pulling back, what’s next for Delta Air Lines (NYSE:DAL) stock? It's unlikely that Delta will reinstate its dividend anytime soon, and this lack of income supports the argument against buying Delta now. According to Raymond James’ Savanthi Syth, the company has about 11 months of liquidity. Investors got some good news in Delta's second-quarter earnings report in July. To order presentation-ready copies for distribution to your colleagues, clients or customers visit http://www.djreprints.com. Table by author. Delta had been paying a $0.4025-per-share quarterly dividend, which would represent a 5.8% annual dividend yield based on its recent share price. Thomas Niel, contributor to InvestorPlace, has written single-stock analysis for web-based publications since 2016. © 2000-2020 Investor's Business Daily, Inc. All rights reserved. As a result, long-term value investors should consider initiating a long position in Delta and look for a nice dip to buy this quarter. Delta (NYSE:DAL) was one of the first of its industry to release its Q3 report, marking another tough quarter. Delta may be stronger than legacy carrier rivals. It's the third airline to used its loyalty program to shore up liquidity. But, Delta stock may be the most cautious way to play this still hard-hit sector. According to Delta's first-quarter 2020 earnings release, the company expects June revenues to be down "90% compared to a year ago." "I hope I'm wrong," said Buffett when discussing Berkshire's airline purge. Copyright, Trademark and Patent Information. The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. InvestorPlace is one of America’s largest, longest-standing independent financial research firms. Market data powered by FactSet and Web Financial Group. Have a look at the chart above, which highlights the year-over-year traffic trends at the TSA (if you prefer a table, it can be found here). We've detected you are on Internet Explorer. Nonetheless, Delta also took some large accounting charges, including $3.1 billion for separation agreements and early retirements for employees, and $2.2 billion related to retirements of older aircraft. In a similar fashion, investors also look for clues around big events, like earnings. DAL Debt To Capital (Quarterly) data by YCharts. 1125 N. Charles St, Baltimore, MD 21201. “Delta’s response to the Covid-19 pandemic looks about as good as any global network carrier could have managed under the circumstances,” he wrote in a note Tuesday morning. Generally, traders are looking for relative-strength plays when the market is going down. Then they were flat in the following session, and fell 1.3% the day after. Started over 40 years ago by a business visionary named Tom Phillips, we publish detailed research and recommendations for self-directed investors, financial advisors and money managers. Should You Buy or Sell Airline Stocks Right Now?
Let's break down Delta's fundamentals to determine if investors should buy the shares at their current discount, or if the discount is justified due to too much uncertainty. Yet, if bleak prospects get priced back into shares, we could reach a compelling entry point. Copyright © 2020 InvestorPlace Media, LLC. Daniel began his Foolish journey posting on The Motley Fool discussion boards, hyped on caffeine and providing commentary on Starbucks, Target, and Apple through the lens of a teenager. Consider Buying Delta Stock Before Its Inevitable Takeoff, Weekly Preview: Stocks To Watch (AMZN, INTC, MSFT, NFLX, TSLA), The Five Fastest Growing Economies In The World, A Cyclical Move Overall in the Markets Is Afoot, BofA’s Hyzy Says, Ignoring Science Led to Over 200,000 U.S. "The future is much less clear to me how the business will turn out for absolutely no fault of the airlines themselves.". One bright spot is that Delta's daily cash burn fell to $27 million at the end of June, down from roughly $100 million a day at the end of March. Should You Buy or Sell Airline Stocks Right Now? When he's not writing, Daniel can be seen floating down the bayou, taking it easy to the tune of sweet summer cicadas and hot humid air. But the company is a top-quality airline, and will be able to make it until better days. It is regularly updated to include the most relevant information.]. The move won’t happen overnight. To justify purchasing Delta shares at their current price, one must believe that the airline will be one of the long-term survivors in the industry, that business travel will largely come back, and that its cash burn will subside sooner rather than later. Global Jets ETF (JETS) was down 1.6% to … Get instant access to exclusive stock lists, expert market analysis and powerful tools with 5 weeks of IBD Digital for only $5! On the date of publication, neither Matt McCall nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article. With the lion’s share of their routes inactive, cash is quickly flying out of the window. Eventually, airline traffic will return in a more robust manner, cash burn will turn to cash flow and revenue will become profit at the bottom line, not loss. However, I do believe that Delta will be one of the two long-term winners in the industry. Copyright, Trademark and Patent Information. It’s mid-October and you know what that means: it’s time for third-quarter earnings. Follow Ken Shreve on Twitter @IBD_KShreve for more market analysis and insight. The company reported fairly bleak second-quarter results last month and also guided that third-quarter revenue would fall 75% to 80% from the same quarter last year.

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