1. Delta Air Lines, Inc. (NYSE:DAL)
Number of Hedge Fund Holders: 55
Delta Air Lines, Inc. (NYSE:DAL) is a legacy airline operator and one of the largest airlines in the United States, which makes it one of the best airline stocks to buy. The company provides scheduled air transportation for passengers and cargo in the United States and internationally. This June, Goldman Sachs analyst Catherine O’Brien raised her price target on Delta Air Lines, Inc. (NYSE:DAL) to $45 from $44 and reiterated a Neutral rating on the shares. The analyst noted that the company’s revenue guidance is coming in better than expectations and unit revenue for the second quarter of 2022 is expected to grow by 21.5%. O’Brien also raised her second-quarter EPS forecast to $1.85 from $1.65 while she gave her rating.
On April 13, Delta Air Lines, Inc. (NYSE:DAL) posted earnings for the fiscal first quarter of 2022. The company reported a loss per share of $1.23 but beat expectations by $0.04. The company generated revenue of $9.35 billion, up 125.25% year over year, and outperformed Wall Street consensus by $312.45 million. Moreover, the stock appears to be undervalued. As of June 7, Delta Air Lines, Inc. (NYSE:DAL) has surged 2.52% over the past six months and has a forward PE ratio of 13.96. trading at $39 per share with the company’s market capitalization at $24.71 billion.
Hedge funds are bullish on Delta Air Lines, Inc. (NYSE:DAL). At the close of Q1 2022, 55 hedge funds were long Delta Air Lines, Inc. (NYSE:DAL) with stakes worth $1.27 billion. This is compared to 47 positions in the prior quarter with stakes worth $1.14 billion. The hedge fund sentiment for the stock is positive.
Millennium Management is the dominating stakeholder in Delta Air Lines, Inc. (NYSE:DAL) as of the first quarter of 2022. The fund reportedly upped its Q4 2021 stakes in the company by 72%, bringing them to $170.27 million in Q1 2022.
Here is what Miller Value Partners had to say about Delta Air Lines, Inc. (NYSE:DAL) in its “Miller Opportunity Equity” fourth-quarter 2021 investor letter:
“We’ve healed greatly from the worst days of the pandemic, and we expect that to continue going forward. We see the greatest disconnects between current market expectations and 18-months-out fundamentals in names like Delta Airlines (DAL).
Delta is a quality airline with shareholder-friendly management. It was the only one not to issue equity during the pandemic. It was also the only profitable airline in the second half of 2021. It generated positive operating cash flow despite business and international travel weakness. When earnings finally normalize, which the company doesn’t expect until 2024, it should earn more than $7/share. After bouncing significantly off the lows, DAL currently trades at $41.99 or less than 6x those earnings.
We’ve believed for over a decade that the US airlines are better businesses than they’ve historically been. Consolidation led to a more rational industry. These companies shifted from growth at any cost to a return on capital mindset, the importance of which can’t be understated. We previously believed a recession would finally demonstrate the group’s improved resilience.
Unfortunately, a global pandemic did exactly the opposite. Buffett, who bought the airlines after being a critic of their historical capital destruction, sold his airlines early in the pandemic due to the risk. The government offered support to the industry due to their national strategic importance, which we believe offers protection against another worst-case scenario. We still believe Delta is a better business than the market gives it credit for and one whose prospects will be materially different 18 months from now. As patient investors, you can expect us to hold tight.”
You can also take a look at 15 Most Valuable Airline Companies and 10 Best Airline Stocks to Buy Now.
