Compared to most stocks in the market at this time, Delta's P/E and earnings per share look strong. With the likelihood of fuel costs remaining depressed for the next months, these figures may improve even more. Does anyone have an idea of what the average P/E ratios have been running for either DAL or the airline industry over an extended period, say 5 or 10 years?
History-cally the majors have stayed in the p/e range of 9-11. That is why you see these past several quarters of increasing earnings and growths not associated with even bigger price run-ups...the big players (instits) are not going to play in the run-up of the p/e ratios above the historical range; that would indicate a paradigm shift in the majors and the investment "industry" is not ready to admit to that possibility (note DAL is ~72% instit owned). The growth rates of domestic and OCLUS airtrans consumption is limited in ways that, for example, the high tech sector is not; those rates are 6 and 7% , respectively. If DAL, for example, wants to grab more than its market share (~17%) of those growth rates so that it may shift into the p/e range of the next industry up(14 to 16) then something has to happen. That "thing" will have to happen to the whole group of majors simultaneously because they all operate so identically(unless one of them developes a star-trek transporter). At this point in time, if the group's performance continues to improve, and they continue to win customers globally, in excess of the market growth rates (as they have demonstrated for several qtrs) that "thing" will happen. As you have probably guessed "thing" = wall street perception, and then his very fine cousin, reward. But there is a lot of mental inertia about this near utility industry and though it seems we've been on the cusp of that new paradigm for a year now its still no closer. To surf the double swell of growing earnings and shifting p/e's would be totally rad! With oil looming toward $10 lately we may have been on our way to the "shift" as airtans pricing would dip lower into Mazlow's hierarchy of humanity...later dude