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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.

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