Delta Air Lines stock price has done well this year, and is hovering near its all-time high of $67.45 as the aviation industry continues to recover. It has risen by over 57% this year, outperforming the S&P 500 and Nasdaq 100 indices that have jumped by less than 30%.
Why Delta Air Lines stock is soaring
Delta Air Lines shares are soaring, in sync with what is happening in the aviation sector. In Europe, IAG is one of the best-performing stocks as it soared by over 106% this year.
Similarly, in Australia, the Qantas share price has soared to a record high this year as demand rose and as the company boosted its reputation among customers and investors.
In the US, United Airlines stock has soared by over 150% this year, while American Airlines has risen by 94% from the lowest point this year. The closely-watched US Global Jets ETF (JETS) has risen to $26, up by 57% from its lowest point this year.
Delta Air Lines, the biggest company in the industry, is the envy of all companies because of its size and profitability.
Its net profit margin stands at 7.7%, while United Air Lines and American Air Lines have margins of 4.9% and 0.51%, respectively. Ryanair, the biggest company in the United States, is the only other major airline with better margins.
Its margins are higher because of investments in premium travel, which is doing well. Indeed, the management expects that its premium ticket revenue will exceed main cabin sales by 2027
Delta Air Lines has a strong market share in the United States, where it commands a 17% market share. It is followed by other companies like Southwest, American, United, Alaska, and JetBlue.
The company’s top competitive advantage is that it has bases across the country and that SkyMiles, its loyalty program has become a major part in its business. It has over 120 million customers. Data shows that the value of the miles earned stood at over $3.4 billion.
DAL business is doing well
The most recent financial results showed that its business was doing well as its revenue growth continued. Its operating revenue rose to $15.7 billion, while its operating income rose to $1.4 billion.
Delta Air Lines had a pre-tax income of $1.6 billion and an operating cash flow of over $1.3 billion.
Analysts are hopeful that Delta Air Lines will continue doing well this year. The average revenue estimate is that it will make over $14.6 billion this quarter, bringing the annual figure to $60.7 billion. It will then make $61.6 billion next year.
The biggest challenge that Delta is facing is that airfares are not growing this year because of the waning demand. Also, it is facing challenges related to Boeing, the giant airline manufacturer. Delta Air Lines is also seeing intense competition from United Air Lines, whose turnaround is accelerating.
Read more: Delta Air Lines is in the ‘best fundamental shape it has ever been in’
Delta Air Lines stock price analysis
The daily chart shows that the DAL stock price has done well this year. It remains above the 50-day and 100-day Exponential Moving Averages (EMA). Also, the company has formed a bullish flag pattern, a popular continuation sign.
This pattern is made up of a long vertical line and a rectangle pattern. In most periods, this pattern results in a bullish continuation.
Therefore, the stock will likely continue rising, with the next point to watch being at $70, which is about 10% above the current level. A drop below the lower side of the flag at $62 will invalidate the bullish view.
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