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Can Delta Air Lines (DAL) Q1 Earnings Surprise Estimates? - Analyst Blog

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Delta Air Lines, Inc.DAL is slated to release its first-quarter 2015 financial numbers before the market opens on Apr 15, 2015.

Last quarter, Delta Air Lines had delivered a 4.00% positive earnings surprise. Moreover, the company's earnings have outpaced the Zacks Consensus Estimate in all of the last four quarters, with an average beat of 5.11%. Let's see how things are shaping up for this announcement.

Factors to be Considered this Quarter

We believe, going forward, Delta will continue to benefit from weak oil prices , improving customer service and the launch of additional routes. Further, the introduction of a new five-tiered seating plan should boost Delta Air Lines' top-line growth significantly in the upcoming quarter.

Moreover, the positive outlook provided by the carrier is encouraging. The company expects operating margin for the first quarter of 2015 in the range of 8-9%, while system capacity is estimated to increase about 5%. Also, the projected fuel price for the first quarter of 2015 now stands at approximately $2.90 to $2.95 per gallon (including taxes and hedges).

However, Delta's disappointing traffic numbers for the month of March raises concern. Passenger unit revenue (PRASM) on a consolidated basis was flat year over year during the month due to adverse foreign currency movements. In fact, currency headwinds are likely to hurt the international performance of the carrier through the entire first quarter of 2015.

Earnings Whispers

Our proven model does not conclusively show that Delta Air Lines is likely to beat the Zacks Consensus Estimate this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. Unfortunately, that is not the case here as elaborated below:

Zacks ESP : Delta Air Lines' earnings ESP is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are poised at 44 cents.

Zacks Rank : Delta Air Lines carries a Zacks Rank #3 (Hold) which increases the predictive power of ESP. However, a 0.00% ESP makes surprise prediction difficult.

Note that stocks with Zacks Rank #4 and 5 (Sell-rated stocks) should never be considered going into an earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are some companies to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:

Ryder System, Inc. R has an earnings ESP of +3.96% and a Zacks Rank #2 (Buy).

Atlas Air Worldwide Holdings, Inc. AAWW has an earnings ESP of +2.04% and carries a Zacks Rank #2.

Avolon Holdings Limited AVOL has an earnings ESP of +4.69% and a Zacks Rank #3.

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DELTA AIR LINES (DAL): Free Stock Analysis Report

ATLAS AIR WORLD (AAWW): Free Stock Analysis Report

AVOLON HOLDINGS (AVOL): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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