Are Any Airline Stocks Buys After Delta's Earnings Beat?

The airline industry, for now, has rebounded from the worst of the pandemic, and Delta Air Lines (DAL) this week reported second-quarter results this week that were better than expected. So are airline stocks buys right now?


Delta’s second-quarter results easily beat on revenue, with a smaller-than-expected loss and positive cash flow. The carrier also said it would add Boeing (BA) and Airbus (EADSY) jets to its fleet, citing a bounce-back in demand.

American Airlines (AAL) also gave preliminary second-quarter figures that weren’t as bad as expected, and it said it expected positive average daily cash build for the first time since the start of the pandemic.

“As we speak, we’re well into the summer travel season,” Delta CEO Ed Bastian said on the airline’s second-quarter earnings conference call. “And if you’ve been to the airport in recent weeks, you’ve seen firsthand how travelers are reclaiming their lives and returning to the skies.”

He said domestic leisure-travel demand was above second-quarter 2019 levels. And he said there were “clear signs” of a rebound in business and international demand heading into the fall.

However, some nations have restricted travel, as concerns grow over the more contagious delta variant of the virus. Coronavirus cases have begun to rise again in the U.S.. Vaccinations have slowed.

Below, we take a look at the chart action for the major U.S. airlines.

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Delta Stock Chart

Delta stock is not in a base. Shares of the carrier are below their 50-day line.

Delta’s EPS Rating is 20 out of a best-possible 99. Its Composite Rating is 35.

The stock’s relative strength line has moved lower.

American Airlines Stock Chart

American Airlines stock is in a consolidation with a 26.19 entry.

Similar to Delta and the other airline stocks, it has a weak 34 Composite Rating and a 10 EPS Rating.

American is the only airline stock mentioned here that is expected to still lose money next year.

United Airlines Stock Chart

United Airlines stock is not in a base. The stock has lost support at its 50-day line.

The carrier’s ratings, as with other airline stocks, are also weak. United has a 12 Composite Rating. Its EPS Rating is 4.

Southwest Stock Chart

Cowen said Southwest stock was the least leveraged airline heading into the pandemic.

Still, Southwest has 17 Composite Rating and a 4 EPS Rating. The stock is below its 50-day line.

JetBlue Stock

JetBlue stock is not in a base, according to Marketsmith.

Shares have a Composite Rating of 6, with an EPS Rating of 4. The stock is below its 50-day and 200-day lines.

Are Airline Stocks Buys Right Now?

IBD ratings for airline stocks are weak, even as some carriers show signs of improvement.

Bottom line: Airline stocks are not buys right now. Investors eager to play the recovery could step in once those stocks enter buy zones. But IBD advises investors to seek out stocks with better ratings that are closer to their highs.


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William Murphy

William Murphy

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