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Can Delta Air Lines, Inc. (DAL) Capitalize On Plunging Oil Prices And Grow Further In 2015?

Delta Air Lines, Inc. (NYSE:DAL) has been among the primary gainers from plunging oil prices. Overall, transportation industry has gained from drop in oil prices. Delta Air Lines, Inc. (NYSE:DAL) shares has gained more than 45% in the last 1 year and around 25% in the last 6 months. But the shares have dropped around 7% since the beginning of this year. Delta Air Lines, Inc. (NYSE:DAL) is expected to report its fourth quarter and full year earnings report on Tuesday, which might work in favor of the stock as many analysts predict oil prices to drop further. ‘The Street’ article discusses about earnings expectations from Delta Air Lines, Inc. (NYSE:DAL) on Tuesday.

Delta Air Lines, Inc. (NYSE:DAL)

Delta Air Lines, Inc. (NYSE:DAL) stock is relatively cheap compared to other stocks in transportation industry and even the other stocks in S&P 500. Delta Air Lines, Inc. (NYSE:DAL) has a P/E ratio of 4, when compared to an average ratio of 19 for other S&P 500 stocks and other airline operators like United Continental and Southwest Airlines with ratio of 45 and 23.

Due to this and plunging oil prices Delta Air Lines, Inc. (NYSE:DAL) stock has a consensus ‘buy’ rating. The stock has an average price target of $60, which is around 30% more than where it is currently trading. But in order to retain the ratings and price targets, Delta Air Lines, Inc. (NYSE:DAL) report has to play its huge role by meeting or beating the analyst estimates.

Analysts predicted a year-over-year climb of 15% in profits to 75 cents a share and 5.5% climb in revenue to $9,58 billion for the fourth quarter. They also expect a full year year-over-year climb in earnings and revenues by 6% and 6.7% to $3.33 per share and $40.3 billion respectively.

Delta Air Lines, Inc. (NYSE:DAL) is also an outlier in the airline industry mainly because the stock is trading at a significant discount. With dropping oil prices they are expected to have a strong cash flow and bottom-line growth. With this they might be able to buy back stocks and boost the dividend. Delta Air Lines, Inc. (NYSE:DAL) pays a dividend of 0.79%, which is clearly outstanding figure in the transportation industry.

But the future of Delta Air Lines, Inc. (NYSE:DAL) in 2015 is upto the earnings report on Tuesday.

Disclosure: None

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