Delta Air Lines stock price analysis and earnings preview: buy or sell?

Delta Air Lines stock price has done better than other American airlines during the ongoing Iran war. It has jumped by 5% in the last 30 days, while other companies like Southwest, United Airlines, and American Airlines have dropped by over 10% in this period. 

DAL stock vs other top airlines | Source: TradingView

Delta Air Lines to publish earnings on April 8

The DAL stock price has done better than other airline companies during the ongoing Iran war that has pushed jet fuel prices higher. Data compiled by IATA shows that the average jet fuel price jumped to $195 a barrel, up by 103% from a month earlier.

Historically, many American airlines helped to deal with these price swings through hedging, a move that most of them ended recently. Delta does not hedge these fuel costs, meaning that it is now having to pay the full price, a move that will undoubtedly affect its margins.

The company will provide more information on how the war will impact its business this year. On the positive side, the company has navigated such shocks before, including in 2022 when Russia invaded Ukraine, leading to higher crude oil prices and flight disruptions.

Also, there is a possibility that jet fuel prices will crash once the war ends, which may happen in the coming weeks or months. Donald Trump has set a deadline for about 2 weeks although analysts believes that it will last for longer.

The most recent results showed that Delta’s business did well in the fourth quarter and last year despite the challenges in the civil aviation industry. Its fourth quarter revenue rose to $16 billion, while the operating profit jumped to $1.5 billion. The company made an operating cash flow of $2.3 billion.

For the year, Delta made over $63.4 billion in revenue, $5.8 billion in operating profit, and an operating cash flow of $14.1 billion. Its total debt and lease obligations ended the year at $14.1 billion.

The company’s business has done well because of its strong market share in key routes in the US and the emphasis on premium seats. It is also cutting the debt it accumulated during the pandemic.

Analysts expect the upcoming results to show that its revenue rose by 5.38% in the first quarter to $14.8 billion, while the earnings-per-share (EPS) rose from 46 cents to 62 cents. 

Chances are that the real numbers will be lower than these estimates because of the war and soaring fuel prices. The annual revenue is expected to grow to $67.2 billion this year followed by $70 billion next year.

DAL stock price technical analysis 

Delta Air Lines stock chart | Source: TradingView 

The daily chart shows that the DAL stock price has done well in the past few weeks, moving from a low of $55.20 in March to the current $66.7.

The stock has formed a harami candlestick pattern, which is made up of a small bullish candle that follows a bigger bearish one.

Delta Air Lines stock remains above the 50-day and 100-day Exponential Moving Averages (EMA) and the ascending trendline that links the lowest swings since June last year  

Therefore, the most likely scenario is where the stock continues rising, possibly to the year-to-date high of $76, which is up by 14% above the current level.