U.S. Markets open in 8 hrs 52 mins

This is Why Delta (DAL) Stock Surged Today

Joseph Lu

Delta Air Lines, Inc. DAL surged as much as 4.49% to $46.89 per share on Wednesday, and it was not the result of United Continental Holdings’ UAL overbooking scandal but the company’s upbeat guidance from its 2017 first-quarter earnings report.

The Georgia-based airline company reported earnings of $0.77 per share, beating the Zacks Consensus Estimate of $0.73 per share. Revenues, however, fell short of expectations, coming in at $9.14 billion.

Delta’s positive forecase for its fiscal 2017 second quarter, though, is what is keeping investors confident in the airline giant. Delta expects its passenger revenue per available seat mile (PRASM) to grow 1% to 3% year-over-year and its operating margin to increase between 17% and 19% in the second quarter.

Revenue guidance included the impact from the April storm that recently hit Atlanta. The company estimated that the storm would probably “reduce its June quarter pre-tax income by $125 million” as the company canceled around 4,000 flights due to the dangerous weather conditions and “subsequent operation recovery.”

“Delta’s 1Q17 earnings report and 2017 outlook is likely to be received well by investors,” said Raymond James analyst Savanthi Syth. “Additionally, 2Q17 PRASM guidance is in line to somewhat better than expectations.”

Delta closed the day with 0.53% drop to $45.05 per share.

Looking for Ideas with Even Greater Upside?

Most of Zacks’ investment ideas are short-term, directly based on our proven 1 to 3 month indicator. In addition, I invite you to consider our long-term opportunities. These rare trades look to start fast with strong Zacks Ranks, but carry through with double and triple-digit profit potential. Starting now, you can look inside our home run, value, and stocks under $10 portfolios, plus more. Click here for a peek at this private information>>

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
United Continental Holdings, Inc. (UAL): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research