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

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, airline operator 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 (1924)
Market Cap $8.9 billion
Industry Airlines
Trailing-12-Month Revenue $35.8 billion
Management CEO Richard Anderson (since 2007)
CFO Hank Halter (since 2008)
Return on Capital (average, past 3 years) 7.8%
Cash/Debt $3.9 billion / $13.5 billion
Competitors AMR
Deutsche Lufthansa
United Continental Holdings

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 42% of the 930 members who have rated Delta believe the stock will underperform the S&P 500 going forward.

Just last week, one of those Fools, addikt06, cautioned Fools about getting too excited over Delta's recent move into oil refining:

Expensive stock in volatile industry and an even more volatile economy ... also I am not convinced by this massive investment in a refinery -- [in my opinion] this would work out well if a) Delta had the know how to run a refinery b) demand was high ... but in this volatile industry demand is as random as it can get and if I am reading this right the consumer is going to be hurting again so in the short term this stock is going down going down.

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Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Try any of our Foolish newsletter services free for 30 days.

We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.


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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 June 07, 2012, at 3:37 PM, ATPwMBA wrote:

    Once again, another Motley Fool dig at Delta. (I guess one of the Fool brothers must have missed a meal due to turbulence and has been pouting ever since, and also giving skewed info to his readers). Had addikt06 done any amount of research before making his refinery comment, they would have realized that Delta has contracted out the management/operation of the refinery to someone with expertise. Over 60% of the US population lives in the corridor reaching from DC to Boston with New York being the biggest single market and dominated by Delta. Airlines use Jet Fuel and are at the mercy of refiners when it comes to how much the refiners decide to produce which in turn can create a huge 'crack spread' driving up fuel costs to an airline. This refinery will supply all the east coast fuel needs for Delta, giving it a HUGE competitive advantage over its competitors. I paid for a year of my MBA buying DAL on the dips, and selling when it went up. It's not uncommon to see over 50% gains in a short time. In my view, considering all factors, DAL is the sector leader with great risk-reward potential.

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