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Is a Beat in the Cards for Delta Air (DAL) in Q2 Earnings?

Zacks Equity Research
·4 min read
Delta (DAL) Gains on Q1 Earnings & Revenues Beat, Rosy Q2 View

Delta Air Lines DAL is scheduled to report second-quarter 2022 results on Jul 13, before market open.

Let’s check out the expectations in detail.

Q2 Expectations

The Zacks Consensus Estimate for Delta’s second-quarter 2022 revenues is pegged at $13.14 billion, indicating 84.4% growth year over year. The Zacks Consensus Estimate for the company’s bottom line is pegged at $1.70 per share, indicating growth of more than 100% year over year.

Though escalating fuel prices continue being a bother, we believe that the gradual improvement in air-travel demand in the United States (particularly on the leisure front), and an uptick in business and international travel are likely to have boosted Delta’s top-line performance in the to-be-reported quarter.

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Backed by this tailwind, Delta has also improved its revenue guidance for the second quarter. The company now expects the June quarter's adjusted total revenues to be fully restored to the 2019 level. Previously, the airline had expected the same to have recovered 93-97% from the 2019 level. DAL anticipates total unit revenues to increase seven to eight points from what it had initially expected.

The operating margin is predicted to be 13-14% compared with the previous guidance of 12-14%. The guided range is less than the 2019 level by three to four points due to lower capacity and higher fuel prices. Fuel price per gallon is now estimated to be $3.60-$3.70 in the second quarter, higher than the previous guidance of $3.20-$3.35. The Zacks Consensus Estimate for average fuel price per gallon (adjusted) is currently pegged at $3.47, indicating a 24.4% sequential increase.

What Our Model Says

Our proven model predicts an earnings beat for Delta this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.

Delta has an Earnings ESP of +5.64% and a Zacks Rank #3.

Delta Air Lines, Inc. Price and EPS Surprise

Delta Air Lines, Inc. price-eps-surprise | Delta Air Lines, Inc. Quote

Highlights of Q1

Delta's first-quarter 2022 loss (excluding 25 cents from non-recurring items) of $1.23 per share was narrower than the Zacks Consensus Estimate of a loss of $1.28. With omicron hampering travel plans in the early part of first-quarter 2022, the carrier incurred a loss after reporting earnings beat in the last two quarters of 2021. However, with the threat of the omicron variant subsiding, air-travel demand was execptionally strong in March.

Delta’s revenues came in at $9,348 million, which beat the Zacks Consensus Estimate of $9,063.5 million and soared more than 100% from the year-ago figure. The uptick in air-travel demand in the United States can be gauged from the fact that 80.5% of first-quarter 2022 passenger revenues came from the domestic markets.

Other Stocks to Consider

Here are a few stocks from the broader Zacks Transportation sector that investors may consider, as our model shows that these have the right combination of elements to beat on their second-quarter 2022 earnings:

Norfolk Southern Corporation NSC has an Earnings ESP of +5.59% and a Zacks Rank #3. NSC will release results on Jul 27. Improved performance of the intermodal and merchandise segments are likely to aid results. You can see the complete list of today’s Zacks #1 Rank stocks here.

Norfolk has an expected earnings growth rate of 14.7% for the current year. NSC delivered a trailing four-quarter earnings surprise of 5.2%, on average.

Norfolk has a long-term earnings growth rate of 10.5%.

Southwest Airlines Co.LUV has an Earnings ESP of +2.94% and a Zacks Rank #3. Improved air-travel demand is likely to aid LUV’s results. LUV will release results on Jul 28.

Southwest has an expected earnings growth rate of 219.53% for the current year. LUV delivered a trailing four-quarter earnings surprise of 33.5%, on average.

Southwest has a long-term earnings growth rate of 6%.

J.B. Hunt Transport Services, Inc. JBHT has an Earnings ESP of +2.64% and a Zacks Rank #3. Improved freight demand is likely to boost results. JBHT will release results on Jul 19.

J.B. Hunt has an expected earnings growth rate of 30.1% for the current year. JBHT delivered a trailing four-quarter earnings surprise of 11.1%, on average.

J.B. Hunt has a long-term earnings growth rate of 15%.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.


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Delta Air Lines, Inc. (DAL) : Free Stock Analysis Report
 
Southwest Airlines Co. (LUV) : Free Stock Analysis Report
 
Norfolk Southern Corporation (NSC) : Free Stock Analysis Report
 
J.B. Hunt Transport Services, Inc. (JBHT) : Free Stock Analysis Report
 
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Zacks Investment Research