Why Delta Air Lines Is Poised to Pull Back

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 and see what CAPS investors are saying about the stock right now.

Delta facts

   

Headquarters (founded)

Atlanta, Ga. (1924)

Market Cap

$13.7 billion

Industry

Airlines

Trailing-12-Month Revenue

$36.7 billion

Management

CEO Richard Anderson

CFO Paul Jacobson

Return on Capital (average, past 3 years)

11.1%

Cash/Debt

$3.4 billion/$13.2 billion

Competitors

Southwest Airlines (NYSE: LUV  )

United Continental Holdings (NYSE: UAL  )

US Airways (NYSE: LCC  )

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

On CAPS, 41% of the 933 members who have rated Delta believe the stock will underperform the S&P 500 going forward.

Just last week, one of those Fools, gameguru, succinctly summed up the Delta bear case for our community:

The recent run-up seems unsupported by fundamentals. Oil prices likely can and will go higher. TSA delays and FAA furloughs may reduce traffic. Recent weather problems will hurt traffic. Delta continues trying to expand its already expansive routes, which is usually a recipe for capital loss in this space.

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  • Report this Comment On March 15, 2013, at 12:16 AM, redtailav8tr wrote:

    Well, where to begin. First, fuel is the biggest cost for all airlines. Delta is being aggressive and purchased the Trainer Refinery to help mitigate fuel costs. Also, as jet fuel prices rise, some of this will be passed on to the consumer. TSA delays and ATC furloughs? Are you kidding? Why would this hurt any airline? Passengers are accustomed to the post 911 screening process in addition to ATC issues. Next point author brought up is weather. There are always going to be weather events all year round - not a good argument either. Lastly, expansion. I don't know if the autyor has flown lately, but airlines are restraining capacity - the flights are full, full, full! Sorry gameguru, but your argument is weak.

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