DAL Surges 16% In A Single Month, Time To Buy The Stock?

We believe there are several things to fear in DAL stock given its overall Weak operating performance and financial condition. Hence, despite its Low valuation, this makes the stock look Risky. Here is our multi-factor assessment.

But no matter how attractive, investing in a single stock carries high risk. Trefis High Quality Portfolio and is designed to reduce stock-specific risk while giving upside exposure

Let’s get into details of each of the assessed factors but before that, for quick background: With $40 Bil in market cap, Delta Air Lines provides scheduled air transportation for passengers and cargo domestically and internationally, operating through airline and refinery segments with core hubs in major U.S. cities.

[1] Valuation Looks Low

This table highlights how DAL is valued vs broader market. For more details see: DAL Valuation Ratios

[2] Growth Is Inconsistent

• Delta Air Lines has seen its top line grow at an average rate of 14.7% over the last 3 years
• Its revenues have grown 3.0% from $60 Bil to $62 Bil in the last 12 months
• Also, its quarterly revenues declined -0.1% to $17 Bil in the most recent quarter from $17 Bil a year ago.

This table highlights how DAL is growing vs broader market. For more details see: DAL Revenue Comparison

[3] Profitability Appears Weak

• DAL last 12 month operating income was $5.8 Bil representing operating margin of 9.3%
• With cash flow margin of 12.0%, it generated nearly $7.4 Bil in operating cash flow over this period
• For the same period, DAL generated nearly $4.5 Bil in net income, suggesting net margin of about 7.2%

This table highlights how DAL profitability vs broader market. For more details see: DAL Operating Income Comparison

[4] Financial Stability Looks Weak

• DAL Debt was $21 Bil at the end of the most recent quarter, while its current Market Cap is $40 Bil. This implies Debt-to-Equity Ratio of 52.7%
• DAL Cash (including cash equivalents) makes up $3.3 Bil of $78 Bil in total Assets. This yields a Cash-to-Assets Ratio of 4.2%

[4] Downturn Resilience Is Very Weak

DAL has fared much worse than the S&P 500 index during various economic downturns. We assess this based on both (a) how much the stock fell and, (b) how quickly it recovered.

2022 Inflation Shock

• DAL stock fell 45.8% from a high of $51.65 on 6 April 2021 to $28.02 on 26 September 2022 vs. a peak-to-trough decline of 25.4% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 6 May 2024
• Since then, the stock increased to a high of $69.06 on 5 February 2025 , and currently trades at $61.78

 
2020 Covid Pandemic

• DAL stock fell 69.1% from a high of $62.03 on 17 January 2020 to $19.19 on 15 May 2020 vs. a peak-to-trough decline of 33.9% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 6 November 2024

 
2008 Global Financial Crisis

• DAL stock fell 81.7% from a high of $21.51 on 19 July 2007 to $3.93 on 5 March 2009 vs. a peak-to-trough decline of 56.8% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 26 July 2013

But the risk is not limited to major market crashes. Stocks fall even when markets are good – think events like earnings, business updates, outlook changes. Read DAL Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.

The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – S&P 500, Russell, and S&P midcap. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.