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Here's Why Investors Should Buy Delta Air (DAL) Stock Now

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·3 min read
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Delta Air Lines, Inc. DAL is currently benefiting from a strong second-quarter 2022 outlook as well as a solid liquidity position.

Solid Rank & VGM Score: Delta currently has a Zacks Rank #1 (Strong Buy) and a VGM Score of A. Our research shows that stocks with a VGM Score of A or B, when combined with a Zacks Rank of 1 or 2, offer the best investment opportunities. Thus, DAL seems an appropriate investment proposition at the moment. You can see the complete list of today’s Zacks #1 Rank stocks here.

Northward Estimate Revisions: Nine estimates for 2022 have moved north in the past 60 days versus no southward revision, thus reflecting analysts’ confidence in the stock. The Zacks Consensus Estimate for 2022 earnings has moved 71.4% up in the past 60 days.

Positive Earnings Surprise History: Delta has an impressive earnings surprise history. DAL’s bottom line outpaced the Zacks Consensus Estimate in all the trailing four quarters, the average being 43.7%.

Strong Prospects: The Zacks Consensus Estimate for 2022 earnings is pegged at $2.64, indicating growth of 164.7% from the year-ago reported figure. Moreover, earnings are expected to register 117.4% growth in 2023.

Driving Factors: Driven by buoyant demand, Delta issued a bright outlook for the second quarter of 2022. Per Delta president Glen Hauenstein, "In the June quarter, we are successfully recapturing higher fuel prices and expect our revenue recovery to accelerate to 93 to 97 percent with unit revenue up double digits compared to 2019." The operating margin (adjusted) for the June quarter is anticipated in the 12-14% range. Delta expects to generate a strong free cash flow in the same period.

Delta’s liquidity position is encouraging. The airline ended the first quarter of 2022 with cash and cash equivalents of $9,955 million, much higher than the current debt of $1,116 million. This implies that DAL has sufficient cash to meet its current debt obligations.

Other Stocks to Consider

Investors interested in the Zacks Transportation sector can also consider stocks like Ryder System, Inc. R, C.H. Robinson Worldwide, Inc. CHRW and GATX Corporation GATX.

Ryder has a trailing-four quarter surprise of 48.2%, on average, with its earnings having surpassed the Zacks Consensus Estimate in all the last four quarters. R is benefiting from improving economic and freight conditions in the United States. Revenues at all segments grew (on higher rental revenues, new business and favorable pricing) in first-quarter 2022.

R currently sports a Zacks Rank #1.

The long-term (three-to-five years) expected earnings per share (EPS) growth rate for C.H. Robinson is pegged at 9%. Improving freight market conditions are aiding CHRW. In first-quarter 2022, the top line improved 41.8% owing to favorable truckload pricing for customers and handsome profits in ocean freight.

Driven by the positives, the stock has rallied 9.3% in the past year.  CHRW currently sports a Zacks Rank of 1.

GATX has a trailing-four quarter surprise of 40.1%, on average, with its earnings having surpassed the Zacks Consensus Estimate in all the last four quarters. The gradual improvement in the North American railcar leasing market is a huge positive for GATX.

Driven by the upsides, the stock has risen 7.6% in the past year.  GATX currently has a Zacks Rank #2.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Delta Air Lines, Inc. (DAL) : Free Stock Analysis Report
 
Ryder System, Inc. (R) : Free Stock Analysis Report
 
C.H. Robinson Worldwide, Inc. (CHRW) : Free Stock Analysis Report
 
GATX Corporation (GATX) : Free Stock Analysis Report
 
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