The Zacks Analyst Blog Highlights: Delta Air Lines, Alaska Air, United Airlines and Southwest Airlines

For Immediate Release

Chicago, IL – October 7, 2019 – announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Delta Air Lines, Inc. DAL, Alaska Air Group, Inc.  ALK, United Airlines Holdings Inc. UAL and Southwest Airlines Co. LUV.

Here are highlights from Friday’s Analyst Blog:

Will Delta Retain Its Beat Streak on Q3 Earnings?

Delta Air Lines, Inc. is scheduled to report third-quarter 2019 results on Oct 10, before the market opens.

The company delivered a positive earnings surprise of 2.6% in the last reported quarter. Operating revenues also topped the Zacks Consensus Estimate. Moreover, the top and the bottom line improved substantially year over year. Notably, the company boasts an impressive earnings history, having outperformed the Zacks Consensus Estimate in each of the trailing four quarters, the average being 3.8%.

Delta is most likely to repeat history in the third quarter as well with the Zacks Consensus Estimate for earnings being revised 9.1% upward in the past 90 days.

Why a Likely Positive Surprise?

The proven Zacks model shows that Delta is likely to beat on earnings in the third quarter of 2019 as well because it has the perfect combination of the following two key ingredients.

Earnings ESP: Delta has an Earnings ESP of +0.49%, representing the percentage difference between the Most Accurate Estimate ($2.29) and the Zacks Consensus Estimate (pegged lower at $2.28). You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Delta currently carries a Zacks Rank #3 (Hold). Notably, stocks with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 when combined with a positive earnings ESP have significantly higher chances of beating estimates.

Thus, the above combination of a favorable ESP and a top Zacks Rank makes us reasonably confident of a likely positive surprise in the impending quarterly results.

Conversely, the Sell-rated stocks (#4 or 5) should never be considered going into an earnings announcement, especially when the company is witnessing negative estimate revisions.

Factors Likely at Play

Solid demand for Delta’s services is anticipated to boost passenger revenues in the third quarter. Notably, the Zacks Consensus Estimate for passenger revenues stands at $11,426 million, indicating a rise from $10,796 million reported in the year-ago period. On the back of robust passenger revenues, the carrier anticipates its top line to augment nearly 6.5% year over year in the quarter to be reported.

Total unit revenues (total revenue per available seat mile or TRASM) are also expected to show a substantial improvement in the quarter. The airline predicts TRASM to rise 2.5% year over year in the period. The consensus mark for TRASM is pegged at 16.69 cents, suggesting an increase from 16.40 cents reported in the third quarter of 2018.

With fuel comprising a major chunk of airline expenditures, modest fuel prices should aid the company’s bottom line. Average fuel price per gallon (adjusted) for the third quarter is projected in the band of $1.95-$2.05, compared with $2.08 reported in the second quarter. Given that fuel prices have mostly been at low levels since the beginning of this year, the likely sequential decline in fuel costs is encouraging. In the year-ago period, average fuel costs were $2.22 per gallon.

Evidently, the company’s earnings are estimated to ascend nearly 25% year over year to $2.20-$2.30 per share in the third quarter. Further, pre-tax margin (adjusted) is envisioned to climb approximately 175 basis points year over year to 15.5%. Additionally, the company is expected to generate free cash flow of more than $1 billion in the September quarter.  

However, the company’s bottom line might partly be affected by the rising non-fuel unit costs (CASM-Ex). Rising passenger numbers, high labor costs and weather-related adversities put pressure on its CASM-Ex. As a result, Delta predicts non-fuel unit costs to increase approximately 2.5% in the quarter. The consensus mark for the same stands at 9.8 cents, above 9.62 cents reported in the year-ago period.

Other Stocks to Consider

Investors interested in the airline space may also consider Alaska Air Group, Inc., United Airlines Holdings Inc. and Southwest Airlines Co. as these stocks too possess the right mix of elements to beat on earnings in their next releases.

Alaska Air Group has an Earnings ESP of +0.50% and a Zacks Rank of 3. The company will report third-quarter 2019 results on Oct 24. You can see the complete list of today’s Zacks #1 Rank stocks here.

United Airlines is also a #3 Ranked company and has an Earnings ESP of +1.64%. The company will announce third-quarter earnings results on Oct 15.

Southwest Airlines is Zacks #3 Ranked and has an Earnings ESP of +0.22%. The company will release third-quarter financial numbers on Oct 24.

More Stock News: This Is Bigger than the iPhone!

It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.

Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.

Click here for the 6 trades >>

Media Contact

Zacks Investment Research

800-767-3771 ext. 9339                                                                          

Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit for information about the performance numbers displayed in this press release.

Click to get this free report

Delta Air Lines, Inc. (DAL): Free Stock Analysis Report

Alaska Air Group, Inc. (ALK): Free Stock Analysis Report

United Airlines Holdings Inc (UAL): Free Stock Analysis Report

Southwest Airlines Co. (LUV): Free Stock Analysis Report

To read this article on click here.

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

Latest Technology Videos


    Zacks is the leading investment research firm focusing on stock research, analysis and recommendations. In 1978, our founder discovered the power of earnings estimate revisions to enable profitable investment decisions. Today, that discovery is still the heart of the Zacks Rank. A wealth of resources for individual investors is available at

    Learn More