Zacks Rank (Who?) on Delta stock---BUY----with reasons

[General Lee]

Delta Airlines Inc.: Zacks Rank Buy
Tuesday September 16, 1:00 am ET
By Bill Wilton

Delta Airlines, Inc. (NYSE: DAL - News) is on the verge of a very lucrative merger with Northwest Airlines. The carrier's international expansion strategy is working as analysts estimates have been rising. Delta is now the fastest growing major carrier in the United States.
Company Description

Delta Air Lines is an international airline with more destinations than any other global carrier. The company offers flights to approximately 311 cities in 52 countries. Delta added 60 new international flights in the past year, making it the fastest growing U.S. airline. The company employs more than 55,000 people, carries a market cap of $2.6 billion, and his headquartered in Atlanta, Georgia.

Advisors Recommend Delta-Northwest Merger

On September 15th Delta announced that proxy advisors recommended Delta shareholders should vote for the proposed all-stock merger with Northwest Airlines. If the merger is approved by shareholders, the combined airline will provide service to over 390 destinations in 67 countries.

Stockholders are scheduled to meet on September 25th to vote on the transaction. The resulting company would be called Delta and continue to be headquartered in Atlanta. Delta, after combining with Northwest, would have one of the industry's strongest balance sheets, will be able to provide unparalleled service to customers, and offer the most international flights of any carrier.

Estimates Continue to Climb

While many analysts are still projecting a net loss for the near future, the estimates continue to increase. The consensus earnings estimate for the current quarter is a loss of three cents up from a loss of 35 cents just 60 days ago. Over the same period of time, the loss expected by analysts has been cut in half, now a loss of 96 cents from $1.82.

Favorable Industry Comparisons

Delta is the top rated airline and is currently poised to turn the corner as it prepare to merge with Northwest. The company's price-to-book is just .66 compared to the industry average of 1.27.

Despite the struggles expected in the near future, Delta has an expected earnings growth rate of 46% for the next 3 to 5 years. The company has a very low debt-to-equity ration of 2.2, compared to the industry average of 57.6.

Record August Traffic

On September 4th the company announced a record number of international passengers with a year over year increase of 17.4%, with capacity up 15.1%.

Domestic traffic was down, however due to decreased capacity, Delta saw an increase in year-over-year yields. The company continues to place an emphasis on international travel, especially transatlantic flights.

Baggage Fees Used to Offset Sky-High Fuel Prices

Delta increased fees, effective as of July 31st, for excess baggage and other items. Customers on domestic flights will still be able to check the first bag at no charge, but will now pay $50 per additional bag, up from $25. Specialty items that require additional care will also see an increase in fees.

If you have not seen a paper in the past 12 months, fuel prices have spiked approximately 75% since last year. Delta, as well as other carriers, are seeking other sources of revenue to counteract the additional costs.

"DAL" Free Stock Analysis: Buy? Sell? Hold?

Zacks Investment Research




I guess these people haven't seen fuel prices come down lately too. We have our next year budget priced at $140 a barrel oil. Anything less is GOOD.


Bye Bye--General Lee

 

[Flying the Line]

A worldwide recession should do wonders for the int'l loads.

 

[Scope out RJ's]

Most likely right. But have you seen what's happening with airline stock today. Most all of them are up double digits.

 

[BID]

I don't know, sounds like someone is really try to sell some DAL stock. Honestly, it doesn't sound like an analyst report, but more like a commercial.

Not that Delta is not doing a sound job, but this research is very one sided.

Not to get too off the subject, but the report indicates that Delta offers the most international destinations of any carrier, I did not know that. You guys have really grown in the international arena.

 

[ACL65PILOT]

Yes, and we will continue to grow to a 50/50 split in the coming years.

 

[Benhuntn]

I found 3 that disagree.. Market grader, Market edge reasearch and Factset. Believe whomever makes you warm and fuzzy.

 

[General Lee]

I found 3 that disagree.. Market grader, Market edge reasearch and Factset. Believe whomever makes you warm and fuzzy.

Well, at least I don't have to go to LBB. Really, your flying is boring.

As far as whom to believe about the financials, I just posted what was on the net. Feel free to post the other guys opinions too. When it comes down to it, we have 2 airlines that cleaned out the cobbwebs in BK, and are strong in seperate areas (Asia, Europe, etc) and are merging. We have a joint contract on the pilot side, and the SLI will be done shortly. So far, not a lot of downside. But, in the end, your flying is still boring and you work too hard. Your pay is good though, but one plane type forever would also get boring quick. I am so glad you flew everywhere before when you were in the AF. That is fantastic. Now, go get bored in ELP.



Bye Bye---General Lee

 

[jehtplane]

I wouldn't buy your stock if you gave me the money to do it.

 

[General Lee]

I wouldn't buy your stock if you gave me the money to do it.

Wow, that's hillarious. How about this, I won't give you any money to buy our stock. Instead, you can use what little money you do have to buy a small sandwich at the gas station. Have fun.


Bye Bye--General Lee

 

[snow-back]

Yes, and we will continue to grow to a 50/50 split in the coming years.

Ahhh, yes. The 2 for one split. I remember the golden days when DAL split 2/1 (I think it was in the $120 range back then). Delta mgmt was touting how they were doing such wonderful things to improve shareholder value. Irrational exuberance, I think is what Alan Greenspan stated (although it was related to something different at the time). Now Delta is expanding in Brazil (see BOVESPA), India (see SENSEX), Europe (see EUR/USD, GPB/USD, USD/CHF, etc), Russia (see Russian Stock Index), etc. I'd say Delta's huge expansion internationally is equivelant to buying an overpriced home in California about 2 years ago. Sorry, but Delta is on the wrong side of the wave.

 

[Mikes Apartment]

I found 3 that disagree.. Market grader, Market edge reasearch and Factset. Believe whomever makes you warm and fuzzy.

Hey Ben Dover, your wife keeps me warm and fuzzy

 

[Truckdriver]

Sorry, but Delta is on the wrong side of the wave.

So should we be expanding rapidly in DEN to snag all those lucrative folks who think they should fly all over the USA for $49? With the weak dollar, it will still be a bargain for foreigners to fly Delta even if their markets suck. Sure, demand is going to drop some, but it still beats having 85% of your business here in the domestic market which sucks even when times are good.

 

[General Lee]

Ahhh, yes. The 2 for one split. I remember the golden days when DAL split 2/1 (I think it was in the $120 range back then). Delta mgmt was touting how they were doing such wonderful things to improve shareholder value. Irrational exuberance, I think is what Alan Greenspan stated (although it was related to something different at the time). Now Delta is expanding in Brazil (see BOVESPA), India (see SENSEX), Europe (see EUR/USD, GPB/USD, USD/CHF, etc), Russia (see Russian Stock Index), etc. I'd say Delta's huge expansion internationally is equivelant to buying an overpriced home in California about 2 years ago. Sorry, but Delta is on the wrong side of the wave.

Wrong side of the wave? We are the wave to all of those countries, and we will fly people from one side of the World to the other, for a lot of money. I guess you didn't know this, but we have already gone to all of those countries plus MORE, and merging with NWA will just make us bigger, and better. The reason we couldn't add any new service to India, Brazil, etc was because those countries weren't giving the rights for foreign carriers to do so. Nobody could go there since they were protecting their own. So, how are we 2 years behind the wave? We are on the forefront----we are among the FIRST to get the new rights to those countries. And speaking of waves, I think I will wave to you from the cockpit, and maybe I throw you a small water bottle if you are thirsty. BTW, you can pull the power any time. Close the cargo door while you are at it too.


Bye Bye--General Lee

 

[BID]

"Stockholders are scheduled to meet on September 25th to vote on the transaction. The resulting company would be called Delta and continue to be headquartered in Atlanta. Delta, after combining with Northwest, would have one of the industry's strongest balance sheets, will be able to provide unparalleled service to customers, and offer the most international flights of any carrier. "

"Unparalleled service to customers" now that is some serious research!

 

[Poahi]

Had you bought Lehman Bros. on April 27, 2007, you would have paid nearly $80 per share. The analysts recommended the stock back then based on fundamentals and diversification.

One of those brokers recommending LEH was, well, see for yourself:

http://www.businesswire.com/portal/...d=news_view&newsId=20070427005147&newsLang=en

Be careful before investing in airline stocks. To me airline stocks are for trading, not investment.

 

[Noserider76]

So should we be expanding rapidly in DEN to snag all those lucrative folks who think they should fly all over the USA for $49? With the weak dollar, it will still be a bargain for foreigners to fly Delta even if their markets suck. Sure, demand is going to drop some, but it still beats having 85% of your business here in the domestic market which sucks even when times are good.

Exactly. Just when you think it can't suck any worse here it falls off a cliff. Wait for the credit card defaults as people realize they can't pay for the lifestyle they've charged. Someone needs to fly the people into the country who hold our debt and are bailing out our companies.

 

[snow-back]

Wrong side of the wave? We are the wave to all of those countries, and we will fly people from one side of the World to the other, for a lot of money. I guess you didn't know this, but we have already gone to all of those countries plus MORE, and merging with NWA will just make us bigger, and better. The reason we couldn't add any new service to India, Brazil, etc was because those countries weren't giving the rights for foreign carriers to do so. Nobody could go there since they were protecting their own. So, how are we 2 years behind the wave? We are on the forefront----we are among the FIRST to get the new rights to those countries. And speaking of waves, I think I will wave to you from the cockpit, and maybe I throw you a small water bottle if you are thirsty. BTW, you can pull the power any time. Close the cargo door while you are at it too.


Bye Bye--General Lee

I guess you didn't understand what I was getting at. Delta is expanding into these international markets at a time when we're entering a global recession. Kind of like going long oil at $145. It's bad timing.

PS: You're sounding a little more juvenile than usual. Is something bothering you? Did you mess up PBS and get a line of SKBO trips this month (great coffee and wine there by the way!).

 

[Benhuntn]

Mike's apt. Nice!!!!!

 

[General Lee]

I guess you didn't understand what I was getting at. Delta is expanding into these international markets at a time when we're entering a global recession. Kind of like going long oil at $145. It's bad timing.

PS: You're sounding a little more juvenile than usual. Is something bothering you? Did you mess up PBS and get a line of SKBO trips this month (great coffee and wine there by the way!).

No, only Vienna and Rio this month. Anyway, the domestic market is even worse, so instead of parking every airplane, we decided to go for places Airtran and Southwest couldn't reach. Lots of opportunities for new routes have just opened thanks to governments now opening up. Could there be a global recession? Sure. Will it be bad everywhere? Maybe not. Do people still have to travel? You bet. It is worse here, so we move planes to go over there. Simple. We ourselves are leaner now unfortunately thanks to BK, so we can compete better than others like AA and CAL.

Bye Bye--General Lee

 

[snow-back]

It is worse here, so we move planes to go over there. Simple. We ourselves are leaner now unfortunately thanks to BK, so we can compete better than others like AA and CAL.

Bye Bye--General Lee

Actually, many industrialized foreign economies are accelerating into recession much faster than the US. The US economy is actually stabilizing and the world is catching up (down) to us.

DAL is leaner...so you have that going for you. Good luck.