Does Delta Air Lines Belong in Your Portfolio?

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With shares of Delta Air Lines (NYSE:DAL) trading around $36, is DAL an OUTPERFORM, WAIT AND SEE, or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

T = Trends for a Stock’s Movement

Delta Air Lines provides scheduled air transportation for passengers and cargo in the United States and internationally. Its route network is centered around a system of hub and international gateway airports. The company also provides aircraft maintenance, repair, and overhaul services for other aviation and airline customers as well as offers staffing services, professional security, and training services. As air transportation is becoming increasingly more popular, Delta Air Lines is poised to capitalize into the future.

Delta Air Line today reported financial results for the March 2014 quarter that gave a strong outlook for the current period, sending its shares up 5 percent. Delta forecast that operating margin, a measure of income to costs, and unit revenue, an important airline measure known as passenger revenue per available seat mile, would both expand in the current period. Delta “has been outperforming on the revenue front and costs are being kept in line,” said Kevin Crissey, an airline analyst with Skyline Research.

Delta, the third-largest U.S. airline by revenue behind American Airlines Group Inc (NASDAQ:AAL) and United Continental (NYSE:UAL), said gains in corporate market share and fees for items such as seat upgrades and baggage would bolster the second quarter. In the first-quarter, passenger revenue rose in the United States and Latin America and fell in the Atlantic and Pacific regions, and the company benefited from lower fuel and plane maintenance costs. Delta canceled more than 17,000 flights in the quarter because of winter weather, costing it $90 million in revenue. Net income was $213 million, or 25 cents a share, up from $7 million, or one cent a share, for the year-earlier first period.

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