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Hessen, Frankfurt/Main, September 12th, 2018: The Delta logo can be seen on one of the airline’s passenger planes… [+] The apron of Frankfurt Airport is home to Delta Air Lines. Photo credit: dpa/Silas Stein (Photo courtesy of Getty Images/Silas Stein/picture alliance)
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Delta Airlines (NYSE: DAL) raised its first-quarter outlook in mid-March as passenger volumes at TSA checkpoints rose over the previous two months. Despite the fact that revenues are likely to be 60% lower than in Q1 2019, the prospect of positive cash flow during the summer has pushed the stock up from $40 in December to near $50 now. Delta reported a $3.7 billion operating cash outflow in 2020, aided by the government’s payroll support program, which is less than the $6 billion decline in the stock’s market valuation since February 2020. Despite the fact that the airline industry continues to suffer severe headwinds, Trefis expects Delta Airlines will post better-than-expected revenue and earnings for the first quarter of 2021, causing the company’s shares to trend upward this week. However, given the dangers involved with a fourth wave of the pandemic produced by new virus strains, we believe the stock has limited upward potential in the coming months. In an interactive dashboard called Delta Airlines Earnings Preview, we examine the company’s quarterly revenue trends as well as our forecasts for Q1 and full-year 2021.
Delta Airlines’ balance sheet shows $27 billion in debt and $14 billion in cash.
To sustain its massive daily cash burn numbers, the corporation solicited financing in 2020 through numerous debt and equity offerings. Due to a sustained fall in air travel demand, the firm entered the second cycle of payroll support in January 2021, substantially limiting its operating losses. Delta has been able to maintain a healthy balance sheet thanks to capital preservation measures, capex reductions, and dividend suspension, with the majority of long-term debt being used to finance short-term investments. The company has postponed dividends and share repurchases until March 2022, in accordance with PSP-2 standards, and investors can only benefit from capital gains if travel demand returns.

Trefis P/S
How has DAL stock performed against the S&P 500?
DAL stock fell from a high of roughly $58 in February 2020 (pre-crisis peak) to a low of around $22 in March 2020 (when markets bottomed out), signifying a 62 percent drop from its pre-crisis high. The stock has more than doubled to near $50 since the restrictions were eased, but the newly enforced restrictions in Europe and the global spread of the U.K. strain are a source of anxiety for the travel sector. As a result, the stock is expected to face headwinds in the near future.
ADDITIONAL INFORMATION FOR YOU
Many pricing discontinuities have arisen as a result of the coronavirus epidemic, which can provide lucrative trading opportunities. For instance, the stock valuation of FedEx vs. Quest Diagnostics reveals a discrepancy with their respective operational growth. Many similar discontinuous pairs can be found here.
Trefis Price Estimates and Trefis Data can be found here./nRead More

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