Delta Air Lines Q2 Earnings Outlook: Traders are Cautious Amid Economic Uncertainty
Delta Air Lines Q2 Earnings Outlook: Traders are Cautious Amid Economic Uncertainty
The company’s stock has risen 30% in the second quarter — will it go higher after traders hear from the CEO?
- Delta Air Lines is scheduled to announce quarterly earnings before the market opens on Thursday.
- Analysts remain cautious on airline stocks amid economic uncertainty as trade war drags on.
- Options market shows an expected move of +/- 3.53 points, or 7% of the current stock price.
Delta Air Lines (DAL) is scheduled to report second quarter fiscal results on Thursday, before the market open. Will DAL end up impressing in July?
The stock price is up over 30% since its last earnings announcement on April 9 when Delta reported earnings per share of $0.37 for its first quarter. That performance has outpaced the S&P 500, which has risen 25% over the same period.
However, the stock price is down 29% from the all-time high of 69.98 reached back in January of this year. Delta stock trimmed 50% of its price from February to April as fear of tariffs sparked worries of a possible recession.
Last quarter, Ed Bastian, Delta’s chief executive officer, said that “with broad economic uncertainty around global trade, growth has largely stalled. In this slower-growth environment, we are protecting margins and cash flow by focusing on what we can control. This includes reducing planned capacity growth in the second half of the year to flat over last year while actively managing costs and capital expenditures.”
While economic uncertainty affected ticket prices, the most recent data has surprised expectations. June 27 and 29 ranked in the top ten busiest days in the history of the Transportation Security Administration (TSA).
Management is likely to express caution over the economic uncertainty, especially as the trade war remains in focus. Still, the reported pickup in air travel going into the peak holiday demand season around July 4, even though it is past the reporting period, may spur some optimism in how Delta projects its confidence during the conference call.
What do analysts anticipate?
Analysts expect Delta to report Q2 earnings per share (EPS) of $2.05 on $15.43 billion in revenue, according to TradingView. That would compare to an EPS of $2.36 on $15.41 billion in revenue a year ago.
Analysts are mostly bullish on the stock, with 21 holding a strong buy or buy rating. There are four hold ratings and zero sell or strong sell ratings on the stock. The average one-year price target is at 60.90, or a 23% increase from Monday’s 49.49 stock price.
Trading Delta earnings
Delta traded with an implied volatility rating (IVR) of 39.6 today, meaning volatility is slightly subdued compared to the past 12 months of trading. The options market shows an expected move of +/- 3.53 points, or 7.1% of the stock price. That’ s in the middle range of the average 5% to 10% earnings move for S&P 500 companies.
Technically, Delta stock has largely traded within a range between 46 and 54 since mid-May. Prices are trading above the 50-day simple moving average (SMA) since that time as well, with the SMA providing support to prices several time in June.
That said, a negative earnings response that pushes prices below that SMA could lead to additional weakness. Alternatively, prices failed to clear the 200-day SMA back in May and have remained below since then.
Thomas Westwater, a tasty live financial writer and analyst, has eight years of markets and trading experience. #@fxwestwater
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