Delta Air Lines (NYSE: DAL) recently reported its Q4 results, with revenues and earnings exceeding the street estimates. The company reported adjusted revenue of $14.4 billion and earnings of $1.85 on a per share and adjusted basis, compared to the consensus estimates of $14.2 billion and $1.76, respectively.
Following the solid beat, DAL stock surged 9% on Friday, January 10. But, if you want less volatility and upside with a smoother ride than an individual stock, consider the High-Quality portfolio, which has outperformed the S&P, and clocked >91% returns since inception.
Looking at Q4 performance, Delta’s revenue of $14.4 billion (adjusted) in Q4 was up 6% y-o-y. Reported revenue of $15.6 billion was up 9%, driven by over 30% y-o-y gains in Cargo and Other business, while Passenger revenue was up 5%. Delta saw a 5% rise in capacity, while passenger revenue per available seat mile remained flat. The company saw its adjusted operating margin expand to 12% from 9.7% in the prior year quarter. This can be attributed to lower fuel expenses, which plunged 18% y-o-y to $2.4 billion. This boosted the company’s bottom line, which stood at $1.85 on an adjusted basis, versus $1.28 in the prior-year quarter.
Delta has guided for over 10% y-o-y rise in earnings in 2025. For Q1, it expects revenue to rise between 7% and 9%, and adjusted earnings to be in the range of $0.70 and $1.00 per share. While DAL stock fared well post the Q4 announcement, the changes over the last four-year period have been far from consistent, with annual returns being more volatile than the S&P 500. Returns for the stock were -3% in 2021, -16% in 2022, 23% in 2023, and 52% in 2024. The Trefis High Quality Portfolio, with a collection of 30 stocks, is much less volatile. And it has comfortably outperformed the S&P 500 over the last 4-year period.
Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.
Given the current uncertain macroeconomic environment around rate cuts and geopolitical tensions, could DAL face a similar situation as it did in 2021 and 2023 and underperform the S&P over the next 12 months — or will it see a strong jump? From a valuation perspective, we think DAL stock has more room for growth. We estimate Delta’s Valuation to be $77 per share, reflecting over 15% upside from its current levels of $65. Our forecast is based on a 10x P/E multiple for DAL and expected earnings of $7.54 on a per-share and adjusted basis for the full year 2025.
While DAL stock looks like it can see higher levels, it is helpful to see how Delta Air Lines’ Peers fare on metrics that matter. You will find other valuable comparisons for companies across industries at Peer Comparisons.
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