Delta Air Lines Is Up 10% This Year and Still Trades at Less Than 12 Times Earnings
The airline's shift toward less-cyclical revenue streams is arguably not reflected in its valuation.
Overview
Airline stocks tend to be volatile, and Delta Air Lines (NYSE: DAL) is no exception. Airline companies tend to have fixed costs and exposure to highly dynamic variable costs, such as jet fuel, and transportation demand can ebb and flow.
This all leaves them exposed to a cycle of declining earnings as revenue dries up while they continue to run routes with lower-than-expected load factors. These risks are why stocks like Delta Air Lines tend to trade at low valuations.
Details
But is it justified?
Source
Originally published at www.fool.com.
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Disclaimer: This article is for informational purposes only and does not constitute investment advice. Data may be delayed up to 15 minutes. Past performance is not indicative of future results. Consult a licensed financial advisor before making investment decisions.