Delta Air Lines Is Up By 5%, Here Is Why

Key Insights

• Delta Air Lines beats analyst estimates on both earnings and revenue. 
• The company mentions “a strong rebound in demand”. 
• Airline stocks have a good chance to gain additional upside momentum as traders focus on the upcoming summer season. 

Delta Air Lines Stock Rallies After Strong Earnings Report

We have recently discussed the best airline stocks, and now we have a chance to take a look at the earnings report from one of the leaders in this segment, Delta Air Lines.

Delta Air Lines reported revenue of $9.35 billion and an adjusted loss of $1.23 per share, beating analyst estimates on both earnings and revenue.

The company noted that the strong rebound in demand provided Delta Air Lines with an opportunity to return to profitability in March.

Traders rushed to buy Delta Air Lines stock as the company’s comments highlighted strong demand. Other airline stocks, like Southwest Airlines and United Airlines, have also gained strong upside momentum today.

What’s Next For Delta Air Lines Stock?

The market’s key concern is the impact of rising oil prices on airlines’ profitability. The main question is whether demand is strong enough to offset the negative impact of rising costs.

Delta Air Lines’ report shows that demand rebounds at a robust pace, so it’s not surprising to see that the company’s stock enjoyed strong support today. At this point, the near-term financials are not important as the market is focused on the company’s future performance.

In the next year, Delta Air Lines is expected to report earnings of $5.55 per share, so the stock is trading at roughly 7 forward P/E, which is cheap for the current market environment. Importanly, analyst estimates have started to move higher, which may provide more support to the stock in the upcoming trading sessions.

For a look at all of today’s economic events, check out our economic calendar.