Delta Air Lines, Inc. (NYSE:DAL) shareholders are probably feeling a little disappointed, since its shares fell 4.1% to US$31.47 in the week after its latest quarterly results. Revenues were in line with expectations, at US$3.1b, while statutory losses ballooned to US$8.47 per share. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
After the latest results, the 17 analysts covering Delta Air Lines are now predicting revenues of US$27.8b in 2021. If met, this would reflect a notable 13% improvement in sales compared to the last 12 months. Per-share statutory losses are expected to explode, reaching US$0.022 per share. Before this earnings report, the analysts had been forecasting revenues of US$28.5b and earnings per share (EPS) of US$1.39 in 2021. The analysts have made an abrupt about-face on Delta Air Lines, administering a small dip in to revenue forecasts and slashing the earnings outlook from a profit to loss.
There was no major change to the consensus price target of US$39.33, signalling that the business is performing roughly in line with expectations, despite lower earnings per share forecasts. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Delta Air Lines, with the most bullish analyst valuing it at US$51.00 and the most bearish at US$30.00 per share. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. For example, we noticed that Delta Air Lines' rate of growth is expected to accelerate meaningfully, with revenues forecast to grow 13%, well above its historical decline of 0.3% a year over the past five years. Compare this against analyst estimates for the wider industry, which suggest that (in aggregate) industry revenues are expected to grow 26% next year. Although Delta Air Lines' revenues are expected to improve, it seems that the analysts are still bearish on the business, forecasting it to grow slower than the wider industry.
The Bottom Line
The biggest low-light for us was that the forecasts for Delta Air Lines dropped from profits to a loss next year. Unfortunately, they also downgraded their revenue estimates, and our data indicates revenues are expected to perform worse than the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that in mind, we wouldn't be too quick to come to a conclusion on Delta Air Lines. Long-term earnings power is much more important than next year's profits. We have forecasts for Delta Air Lines going out to 2024, and you can see them free on our platform here.
And what about risks? Every company has them, and we've spotted 2 warning signs for Delta Air Lines (of which 1 is significant!) you should know about.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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