Here’s Why Delta Air Lines Should Be On Your Radar

December 26, 2012

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E = Equity to Debt Ratio Is Weak

The debt-to-equity ratio for Delta is very high. In most cases, this would be a huge red flag. However, Delta is likely to bring this number down over the next few years. As long as the direction is correct, all is forgiven. In regards to the balance sheet, as stated earlier, Delta would like to decrease long-term debt to $10 billion by the end of 2013. Once again, the direction is the key.

	Debt-To-Equity	Cash	Long-Term Debt
DAL	7.42	$3.63 Billion	$12.66 Billion
LCC	6.02	$2.44 Billion	$4.57 Billion
UAL	6.63	$6.76 Billion	$12.12 Billion

T = Technicals on the Stock Chart Are Strong

Delta has performed well over the past year.

	1 Month	Year-To-Date	1 Year	3 Year
DAL	22.08%	40.79%	26.27%	-1.81%
LCC	10.29%	155.80%	109.90%	180.70%
UAL	19.49%	23.48%	9.70%	1.26%

At $11.36, Delta Air Lines is currently trading above all its averages.

50-Day SMA	10.00
100-Day SMA	9.61
200-Day SMA	10.04

E = Earnings Have Been Sporadic, But Revenue Has Been Consistent

Delta Air Lines has shown steady annual revenue growth. On the surface, it looks as though earnings have been unpredictable, but keep in mind that 2008 and 2009 were at the height of the financial crisis. Since then, results have been solid.

	2007	2008	2009	2010	2011
Revenue ($)in billions	19.15	22.70	28.06	31.76	35.12
Diluted EPS ($)	5.42	-19.08	-1.50	.70	1.01

Looking at the last quarter on a YoY basis, we see an increase in revenue and earnings.

	9/2011	12/2011	3/2012	6/2012	9/2012
Revenue ($)in billions	9.82	8.40	8.41	9.73	9.92
Diluted EPS ($)	.65	.51	.15	-.20	1.23

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