Out Fox The $treet

Updated - Apr. 11, 2023 Delta Air Lines (DAL) guides up for Q2 and '23, yet the market yawns. American Airlines again fell on the strong guidance from the airline.  -“Delta is building momentum, with the best people in the industry generating nearly $5B of operating profit over the last twelve months,” CEO Ed Bastian said. “For the June quarter, we expect to deliver record revenue, and an adjusted operating margin of 14 to 16 percent with earnings per share of $2.00 to $2.25. With solid March quarter profitability and a strong outlook for the June quarter, we are confident in our full-year guidance for revenue growth of 15 to 20 percent year over year, earnings of $5 to $6 per share and free cash flow of over $2B.” -The consensus EPS forecast for the second quarter stood at $1.64 while full-year forecasts were pegged at $5.37. The 15% to 20% revenue growth guide is also well above the 10.56% consensus. Original article posted on April 7.  American Airlines won't be harmed by h...

Update - Dec. 19  The market is so off on airline stocks that Citi increased the PT on a stock already providing 67% upside. Most of the other legacy airlines are even cheaper. The market is so focused on recession fears, investors are missing the massive opportunity.  Citi analyst Stephen Trent raised the firm's price target on Delta Air Lines to $59 from $55 and keeps a Buy rating on the shares. Delta's combination of international route exposure, seat mile cost dilution and relatively stable fuel prices should support the shares over the next year, Trent tells investors in a research note. The analyst continues to view Delta as his favorite U.S. carrier. As the recovery on several international corridors seems to be six- to nine months behind the U.S. domestic recovery, Delta's passenger volumes could benefit "from this momentum," writes Trent. Read more at:  https://thefly.com/n.php?id=3634887 Update - Dec. 15 The  airline stocks remain absurdly cheap. One can...

  After solid traffic demand during the Thanksgiving holiday, Delta Air Lines appears on pace to generate strong profits in Q4'22. The airline continues to trade like the future is cloudy and not represented by ~$4.50 in per share profits over the last 3 quarters. The stock is a gift here trading below 5x 2024 EPS targets. After a strong Thanksgiving holiday, investors should have no doubt about the rebound in airlines and specifically  Delta Air Lines  ( NYSE: DAL ). The company has produced a remarkable rebound in profits, yet the stock is still valued  as if a profitable rebound remains in doubt. My  investment thesis  remains ultra-Bullish on the airline stock with an expectation for a full profit rebound for a stock that was once considered cheap at $60 and now trades below $35. Read the full article on Seeking Alpha.  Disclosure: No position mentioned. Please review the disclaimer page for more details. 

Delta Air Lines entered the crisis already trading at a disaster discount. The airlines are quickly approaching load factors where average flights are break-even. The stock has upside from the 52-week high of $63 due to eventual multiple expansion. Delta Air Lines  (NYSE: DAL ) continues to rebound from the Buffett lows as airline traffic rises off the April lows. One of the most crucial metrics for valuing the airlines going forward is the load factor. My  investment thesis  is highly bullish on the airlines even with this recent rally in the stock as the load factors are rising and the potential for eliminating the disaster discount coming out of this down cycle improves the long-term potential of Delta. Read the full article on Seeking Alpha.  Disclosure: Long AAL, UAL. Please review the disclaimer page for more details. 

American Airlines has over $17 billion in liquidity to survive the current air passenger traffic crash. The company has billions in unencumbered assets and a very valuable loyalty program as additional collateral for more funding. May 8th passenger traffic was up over 25% to the highest level since March 25. The market continues to misunderstand daily cash burn rates making the stock a buy at $10. The story of the day for  American Airlines Group  ( AAL ) is that the airline now has breathing room. With the government aid, the company has the liquidity to survive as passenger traffic continues to grow on a weekly basis even faster than ridesharing. The market remains highly fearful due to negative headlines such as Warren Buffett selling shares, but my  investment thesis  is even more bullish here. Read the full article on Seeking Alpha.  Disclosure: Long AAL, UAL. Please review the disclaimer page for more details. 

Southwest Airlines reported mixed Q1 results as the coronavirus hit March revenues. The airline now has access to over $13 billion of cash after raising an additional $3 billion of funds. The company has reduced cash burn to ~$10 million. The stock is a bargain at 7x normalized earnings, but the airline isn't the best deal in the sector. Southwest Airlines  ( LUV ) has seen a tepid rally following  Q1 results  as the company is poised to quickly wipe out the daily cash burn. The general airline industry was up over 10% on the quarterly news and bullish signs of  reopening the economy  and international travel with passenger tests. Unfortunately, this airline caused a self-inflicted wound by rushing out equity offerings when cash wasn't needed. Under $30, my  investment thesis  remains bullish on the stock while acknowledging that better upside exists in other sector stocks. Read the full article on Seeking Alpha.  Disclosure...

Delta Air Lines obtained $5.4 billion in government aid. The airline stocks trade at constant discounts to the troubled cruise liners despite better business prospects. The stock trades at a substantial discount to the market at only 4.8x drastically reduced forward EPS estimates. For years now,  Delta Air Lines  ( DAL ) has been the best-run legacy airline, yet the stock was never loved by the markets. The airline always traded at far lower ratios than the other transport stocks and now the lack of love is apparent compared to the cruise lines. My  investment thesis  remains highly bullish on the airlines and particularly Delta as a safe bet for an eventual rebound in air passenger traffic rebound. Read the full article on Seeking Alpha.  Disclosure: Long UAL. Please review the disclaimer page for more details. 

More evidence continues to show that the strikes on Saudi oil facilities actually came from Iranian missles, not Yemen drones. Not even sure, if it matters, because the whole world knows that Iran was involved.  Dion Nissenbaum ✔ @DionNissenbaum US looking to declassify satellite imagery to bolster contentions that Iran was origin of weekend attack on Saudi oil industry as mounting evidence points to cruise missiles fired from Iran or Iraq, not Houthi drones launched from Yemen: https://www. wsj.com/articles/iran- rejects-u-s-accusations-over-saudi-oil-facility-attacks-11568544181?mod=hp_lead_pos1  … w/ @ summer_said Iran Rejects U.S. Accusations Over Saudi Oil-Facility Attacks Iran denied American accusations that it was behind Saturday’s strikes on Saudi oil facilities, as the kingdom rushed to contain the fallout from attacks that could disrupt global petroleum supplies. wsj.com 437 8:35 AM - Sep 15, ...

American Airlines has been beaten down this last year as investors incorrectly focus on net debt levels. Reduced capital expenditures and pension payments will free up around $3 billion in additional cash flows. The stock trades at half the P/S multiple of Delta Air Lines. The airline is in the middle of a $4.2 billion initiative to improve revenues and lower costs. The amazing decline in   American Airlines Group   ( AAL ) has left the stock at such a discount to the sector that a major Wall Street analyst actually called the stock undervalued due to the simple   P/S multiple . The airline has a lot more going on to support owning the stock, but an easy bull case always helps. Read the full article on Seeking Alpha.  Disclosure: Long AAL, UAL. Please review the disclaimer page for more details. 

The question investors need to ask is why are they sold the legacy airlines based on one number and not the complete picture. This interview with the Delta Air Lines (DAL) CEO should've had investors rushing back into the stock today. Ironically though, the stocks didn't gain until oil prices rose. My Net Payout Yields portfolio continues to hold American Airlines Group (AAL) and United Airlines (UAL) due to massive stock buybacks. These dips in the sector are actually good for those stocks. The cheaper the better for the stock buyback plans. Disclosure: Long AAL and UAL. Please review the disclaimer page for more details. 

Jamie Baker, JPMorgan Chase senior airline analyst, discusses how the airlines are fundamentally different now. The market continues of focus on every hurdle while the legacy stocks are extremely cheap. One can almost throw a dart at Delta Air Lines (DAL) , American Airlines Group (AAL) , and United Airlines (UAL) and win at these levels. Watch him take down the CNBC host on baggage fees. Disclosure: Long AAL. Please review the disclaimer page for more details. 

The investment thesis remains that the airline industry has changed from the money-losing sector of the past. Airlines like AAL haven't seen the stocks benefit from the lower fuel prices and large profits. Industry moves related to suddenly higher oil prices are signs of the changing industry for the good. The airline sector and  American Airlines Group (NASDAQ: AAL )  in particular are trading at multi-year lows due to fears of an industry relapsing to problems of the past. The market though appears to be overlooking some industry facts in the process of quickly rushing to a negative judgment. Read the full article on Seeking Alpha.  Disclosure: Long AAL. Please read the disclaimer page for more details.

Delta Air Lines reminded the market that the industry will make the necessary capacity cuts on rising oil prices. The cheap valuation stand outs based on the level of capital returns. If you agree that the airline industry has indeed changed, do not pass up the valuation in the sector and especially with Delta. To anybody that would listen, the airlines have stated repeatedly for the last couple of years that the industry has changed. As the industry has reported unheard of profits over the last couple of years, the rising capacity has brought back fears of the industry of the past. Read the full article on Seeking Alpha.  Disclosure: No positions mentioned. Please read the disclaimer page for more details.

Delta Air Lines posted another solid quarter in Q1. The earnings call did little to eliminate the concerns of Wall Street, keeping the stock back. The company faces a ton of variables making a valuation analysis imperfect, but Delta Air Lines remains extremely cheap. The  quarterly results  for  Delta Air Lines (NYSE: DAL )  were solid as usual. The airline continued a string of record results going back three years now. Read the full article on Seeking Alpha.  Disclosure: No positions mentioned. Please read the disclaimer for more details.

United Airlines is generally seen as the weakest legacy airline highlighted by the activist moves. The large stock buybacks isn't accurately reflected in EPS estimates and stock valuation. The recommendation is to use any dips to load up on the airline. Despite generally considered the worst of the legacy airlines further  highlighted  by the battle over the BOD,  United Airlines (NYSE: UAL )  is now a cash flow machine. The airline even  announced  a bigger intention to repurchase shares as the stock plunged during Q1.  Read the full article on Seeking Alpha.  Disclosure: Long UAL. Please read the disclaimer page for more details.  

Delta Air Lines continues to tell anybody that will listen the purchase prices for used 777s.  Along with a downgrade, Boeing is down sharply on the news.  The recommendation is for investors to continue focusing on the order book for narrow-body planes and ignore the noise generated by a customer looking for cheaper planes.  In an interesting news twist, Asia's largest carrier agreed to purchase 110 Boeing (NYSE: BA ) airplanes, yet the market appeared more interested in the cost of one used plane. The news bits continued a spate over the last several months regarding a glut in the airplane market and specifically the wide-body jets. See my original research on the issue here . Read the full article on Seeking Alpha. Disclosure: No position mentioned. Please review the disclaimer page for more details. 

Summary Delta Air Lines easily surpassed analyst estimates for Q2'15. The airline ramped up the capital return plan by returning $1 billion to shareholders during the quarter. The stock remains inexpensive at 10x current year EPS estimates and catalysts for higher earnings going forward.   Another strong quarter by Delta Air Lines (NYSE: DAL ) is apparently not appreciated by the market. The stock initially dropped over a $1 before rebounding. Not only did the airline beat analyst estimates, but also the company produced several financial metrics typically associated with much higher stock prices.  Read the full article at Seeking Alpha. Disclosure: No positions mentioned. Please read the disclaimer page for more details .

The airline sector reached new 2015 lows. IATA raised the projections for 2015 airline profits. Raymond James downgrades hit the legacy airline stocks hard, but the forecasts are actually very bullish for the stocks. At the same time that the IATA dramatically raised its estimate for global airline profits, an analyst firm downgraded the legacy airline stocks crashing them to recent lows. While some capacity concerns have propped up this year, one has to wonder why so much fear exists in stocks trading at exceptionally low PE multiples. Read the full article on Seeking Alpha. Disclosure: Long AAL. Please review the disclaimer page for more details. 

Summary Delta Air Lines reported Q1'15 earnings that beat the estimates despite losses associated with fuel hedges. The airline continues to face more headwinds than perceived by a market only focused on lower market fuel costs. Delta continues to trade at valuation multiples substantially below other companies. While currency headwinds and a few fare wars grab market attention, airlines like Delta Air Lines (NYSE: DAL ) continue to report exceptional numbers. The market appears more concerned with the potential for rebounding fuel costs than the exceptional value presented by the stock. Read the full article at Seeking Alpha. Disclosure: No positions mentioned. Please review the disclaimer page for more details. 

 Summary Delta Air Lines reported Q3 '14 earnings. The stock remains a strong buy. The long-term tailwinds in the industry were anticipated to improve the earnings profile, but the short-term impacts of Ebola have been higher than expected.  Prior to the market open, Delta Air Lines (NYSE: DAL ) reported strong Q3 '14 earnings. The airline sector has been under significant pressure due to concerns about slowing global growth and Ebola fears. The company beat analyst estimates, but the key was the solid guidance for Q4.  Read full article at Seeking Alpha.  Disclosure: No positions mentioned. Please review the disclaimer page for more details.