My Top Stock to Buy Now
It's been a difficult few years for the airline industry, and Delta Air Lines (NYSE: DAL) hasn't been spared any of it. The pandemic and resulting travel restrictions savaged the industry, and it's still recovering. Meanwhile, a host of challenges, including labor shortages, rising fuel costs, supply chain constraints, and ongoing travel restrictions, impacted the industry in 2022. Still, despite a host of challenges, the stock looks like an excellent value right now.
Like much of the aerospace and hospitality-related industries, Delta's management benchmarks its performance to 2019 -- the last year before the pandemic hit. It's a useful yardstick because it helps highlight the point that the airline industry has growth prospects from merely catching up to pre-pandemic demand levels. That's a critical consideration because many investors in a highly cyclical industry like airlines conclude that a slowing economy means airline stocks are a sell.
Indeed, the negative thinking appears to be baked into Wall Street analysts' estimates for the airline. For example, on Delta's financial outlook and strategic update in mid-December, management called for earnings per share (EPS) of $5 to $6 for 2023 and then for more than $7 in 2024. Meanwhile, the Wall Street consensus is for $5.20 in 2023 (at the low end of the $5 to $6 range) and $6.89 (below management's estimate). It appears that Wall Street doubts Delta's ability to overcome cost pressures and the risk that a slowing economy will hit the company's revenue generation.
Source Fool.com
