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Should Value Investors Buy Delta Air Lines (DAL) Stock?

Zacks Equity Research

Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.

One company value investors might notice is Delta Air Lines (DAL). DAL is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock has a Forward P/E ratio of 8.58. This compares to its industry's average Forward P/E of 9.42. Over the past 52 weeks, DAL's Forward P/E has been as high as 9.85 and as low as 7.16, with a median of 8.44.

Finally, our model also underscores that DAL has a P/CF ratio of 6.05. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 6.76. DAL's P/CF has been as high as 7.48 and as low as 5, with a median of 6.47, all within the past year.

These are only a few of the key metrics included in Delta Air Lines's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, DAL looks like an impressive value stock at the moment.


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