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DAL

Delta Air Lines reports third-quarter results

What's Happening

Airliner Delta Air Lines ( DAL ) will report third-quarter results before the market open on October 13. Analysts have a consensus of $1.65 for the quarter, down from $1.74 during the same period last year. The stock has fallen 22.3% on the year.

Technical Analysis

DAL was recently trading at $39.38, down $13.39 from its 12-month high and $6.78 above its 12-month low. Overall technical indicators for DAL are bearish and the stock is showing signs of a possible trend reversal. The stock has recent support above $38.20 and recent resistance below $40.50. Of the 10 analysts who cover the stock, seven rate it a "strong buy", one rates it a "buy", and two rate it a "hold". The stock receives S&P Capital IQ's 5 STARS "Strong Buy" ranking.

Analyst's Thoughts

Delta Air Lines trended strongly lower during the first half of the year, but the stock appears to have turned the corner and has been moving higher since mid-summer. The company kicked off the year on a sour note with a disappointing quarterly report in January, and after an earnings beat in April, Delta once again missed estimates last quarter. This quarter analysts expect earnings of $1.65 per share, down from $1.74 during the same period last year. Rising oil prices are having an impact on the sector, and if OPEC is able to reach a deal on production at its next meeting, we could see a lot of pressure on all transportation stocks. DAL has a P/E of 6.35, so the downside is likely limited, but with growing expectations of a production freeze from OPEC it is hard to imagine the stock making any strong moves higher.

Stock Only Trade

Bullish Trade

If you want a bullish hedged trade on the stock, consider a December 29/34 bull-put credit spread for a 50-cent credit. That's a potential 11.1% return (57.9% annualized*) and the stock would have to fall 12.4% to cause a problem.

Bearish Trade

If you want to take a bearish stance on the stock at this time, consider a December 46/50 bear-call credit spread for a $0.20 credit. That's a potential 5.3% return (27.4% annualized*) and the stock would have to rise 17.3% to cause a problem.

Covered Call Trade

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

Originally published on InvestorsObserver.com


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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