CA - Several Reasons Not To Own 'Cheap' Delta Air Lines
2024-03-21 14:01:59 ET
Summary
- Delta Air Lines, Inc. is currently trading at a cheap valuation compared to the overall market, with a P/E ratio of just over seven times trailing earnings.
- The stock has experienced a 50% increase from its recent lows and the company had a banner year in FY2023. Insiders used the rally to sell some shares in February.
- Despite its cheapness and solid overall management, there are several reasons not to chase the stock at these levels which are highlighted in the paragraphs below.
Today, we take a look at Delta Air Lines, Inc. ( DAL ) which is a very cheap stock from a valuation basis compared to the overall market. It should be noted that airlines almost always trade at a deep discount to the overall market multiple (approximately 20 times earnings currently on the S&P 500), but Delta currently trades at just over seven times trailing earnings. The company made $6.25 a share in FY2023 on just over $54.6 billion in revenue. Delta had a rock-solid year in 2024 with pre-tax income nearly doubling to $5.2 billion, while return on investment capital rose approximately 500 bps to 13.4%....
Several Reasons Not To Own 'Cheap' Delta Air Lines