1-Star Stocks Poised to Plunge: Delta Air Lines?

Recs

6

Based on the aggregated intelligence of 135,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, Delta Air Lines (NYSE: DAL) has received the dreaded one-star ranking.

With that in mind, let's take a closer look at Delta's business and see what CAPS investors are saying about the stock right now.

Delta facts

Headquarters (founded)

Atlanta, Ga. (1924)

Market Cap

$5.29 billion

Industry

Airlines

TTM Revenue

$26.1 billion

Management

CEO Richard Anderson (since 2007)
CFO Hank Halter (since 2008)

Return on Capital (average, last three years)

2.1%

Cash / Debt

$4.9 billion / $16.6 billion

Competitors

AMR (NYSE: AMR)
LAN Airlines (NYSE: LFL)

CAPS members bearish on DAL also bearish on

UAL (Nasdaq: UAUA)
US Airways (NYSE: LCC)

CAPS members bullish on DAL also bullish on

General Electric (NYSE: GE)
Citigroup (NYSE: C)

Sources: Capital IQ, a division of Standard & Poor's, and Motley Fool CAPS. TTM = trailing 12 months.

Over on CAPS, 359 of the 823 members who have rated Delta -- 44% -- believe the stock will underperform the S&P 500 going forward. These bears include ukdaytrader1234 and Swigz.

Late last month, ukdaytrader1234 explained why the stock would likely stay grounded:

Heavy debt. [D]id not make substantial amount even in the good years. Earnings don't justify valuation given the size of its debt. Intangibles relatively high -- may need to be written off to a greater extent.

In a rant from one month earlier, Swigz looks at Delta from a passenger's perspective:

The lines for customer service for people missing connections were almost a football field long at every airport I landed at. They lost my bags and told me they would deliver them that night, but did not deliver it until the next night. ...

I have a hard time believing that an airline with constant delays and terrible customer service has too good of a future. Now I know this pitch has nothing to do about the numbers, but I believe if you want to know about the future of a company you should go and actually see the company in action. ... Delta needs to get their act together soon because I am seeing less and less repeat customers. ...

What do you think about Delta, or any other stock for that matter? Make your voice heard on Motley Fool CAPS today. More than 135,000 investors are waiting to hear what you have to say. CAPS is 100% free, so simply click here to get started.

“Make Big Money With Options” Motley Fool CFO Ollen Douglass recently made over $100,000 buying options on 7 well known stocks. Now we’re committed to turning his small fortune into a massive one! And we want you to join us! Enter your email address to hear more:

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. The Fool's disclosure policy always gets a perfect score.

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On August 21, 2009, at 11:54 AM, DFWFRED wrote:

    I don't really think Swigz has a clue as to what he/she is talking about. I fly Delta 50+ times a year and rarely do I have a baggage issue or any other type of issue. In fact almost all of my flights arrive early. If you want to talk airlines that have customer issues you need to go and fly USAir or UAL then perhaps you will get a new perspective.

  • Report this Comment On August 21, 2009, at 12:16 PM, jecoba3 wrote:

    I agree with DFWFRED. I am a frequent traveler and prefer to use Delta. They serve my local airport well (probably the largest carrier) and rarely are the flights late or cancelled (unlike US Scareways).

    Also, in terms of no repeat customers, I find that unlikely. The Delta flights I have been on have all been full, or near full flights. I understand some part of that is the reduced number of flights and use of smaller aircraft in certain markets, but I have flown on some other airlines with fairly open planes.

  • Report this Comment On August 21, 2009, at 1:42 PM, Columbo1 wrote:

    As a former Delta employee I agree that their passenger service has completly changed for the worse. Delta was at one time the Top Rated for passenger service and now it is terrible. I arrived at the gate in ATl yesterday 13 mins before scheduled departure and found several passengers standing by the unattended check in desk. I went to the agent at the adjacent gate and requested that he call the agent in the jetway and advise him that he had several revenue passengers that needed to be boarded and was advised that he would not do it because they closed the flight 10 mins before departure and they could not board them. I latter talked to a RED JACKET PSA and he could not explain the Gate Agents actions. That is not what I call Passenger Service and Mr. Wollman has to be rolling over in his grave,

  • Report this Comment On August 21, 2009, at 3:31 PM, RalphKramden wrote:

    IMO Delta senior management changed years ago from attempting to be a great airline to shelling it out for maximum management compensation. Customers, creditors, employees, and retirees have been pushed aside to maximize senior management return. The Board of Directors have been rubber stamps for management for years. This happened before they filed for bankruptcy and continues through today.

  • Report this Comment On August 21, 2009, at 3:51 PM, ILIKETOFLY wrote:

    There has to be a cutoff time when passengers need to be IN their seats on the plane and the gate counter closed, so the plane can leave on time, if possible (no weather or air traffic controllers' delays). One of the most important items that passengers want is flights leaving on time and the cheapest fares. Many passengers do NOT know much of their fare is taxes. There is little loyalty to any company as the lowest fare gets the passenger most of the time. Delaying most of the passengers and crew for a few people who show up late, is not fair, and might cause people to miss their connections in their next city, including delaying the crew from their next flight and the plane from its next flight. Could it be that a lot of the anger that you see on tv is due to many people seeing their income and benefits getting smaller while top management and politicians getting more pay and benefits???

  • Report this Comment On August 21, 2009, at 4:13 PM, JCBO wrote:

    Columbo1, If you were a former DAL employee, I would have thought you would know how to correctly spell the founder's name. Also, we do not call the agents RED JACKETS, close, but not quite. Clearly you have never worked for DAL. Please spare us the lies.

  • Report this Comment On August 21, 2009, at 10:56 PM, SWEAT7 wrote:

    DAL has the deire to b e the number one flyer to africa for the world cup coming soon. They are focusing on a non stop flight to make irt more convenient for flyers.

    I do not know if this will help them gain market share but the info is out and they are eginning an aggressive frontal assault on this goal.

    just saw it on Erin Burnett reporting from Africa..

  • Report this Comment On August 26, 2009, at 2:03 PM, mfm100 wrote:

    As an American Airlines Employee, I can say that Delta is a GREAT AIRLINE!

    The employees I have come in contact while flying on Delta are outstanding!

    Passengers expectations are way to high for the price they are currently paying to fly!

    Delta, as well as American and the other carriers seem to suffer from GREEDY EXECUTIVES who only care about HUGE SALARIES AND BONUSES! AS WELL, AS HUGE EXIT PACKAGES!

    THESE EXECUTIVE"S DO NOT CARE ABOUT THE PASSENGERS OR THEIR EMPLOYEES AND THIER FAMILIES!

    THIS DISEASE OF GREED AND MANIPULATION HAVE SPREAD ACROSS CORPORATE AMERICA!

    THIS IS WHAT IS CAUSING THE CURRENT ECONOMIC MELTDOWN.

    AMERICA NOW HAS A 2 CLASS SOCIETY!!

    IT DID NOT WORK IN OTHER PARTS OF THE WORLD AND IT WILL NOT WORK IN AMERICA!

    GOD BLESS WORKING THE HARD WORKING AMERICAN PEOPLE!

Add your comment.

Compare Brokers

TD AMERITRADE
more info
ShareBuilder
more info
Power E*Trade

more info
Scottrade
more info
Fool Disclosure

DocumentId: 968941, ~/Articles/ArticleHandler.aspx, 12/2/2009 4:57:05 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

The Must-Read Story on Fool.com
Fool Search: Be GM's Next CEO!

By The Motley Fool

Fool Search: Be GM's Next CEO!

Related Tickers

12/2/2009 4:00 PM
UAUA $9.29 Up +1.03 +12.47%
UAL Corp CAPS Rating: *
GE $16.07 Down -0.10 -0.62%
General Electric C… CAPS Rating: ****
LFL $16.05 Up +0.12 +0.75%
Lan Airlines S.A.… CAPS Rating: **
AMR $6.79 Up +0.50 +7.95%
AMR Corp CAPS Rating: *
C $4.10 Down +0.00 +0.00%
Citigroup, Inc. CAPS Rating: **
DAL $9.29 Up +0.67 +7.77%
Delta Air Lines, I… CAPS Rating: *
LCC $3.97 Up +0.28 +7.59%
US Airways Group,… CAPS Rating: *

Community: Investing Wiki

Term Of The Hour

Pro forma: Pro forma means "for form" or "for form's sake" and is from the Latin. For financial statements, it is an "as-if" situation.

Want to learn more or edit this definition?
Click here to read more!