What happened

Delta Air Lines (NYSE:DAL) stock closed up 4.9% on Thursday after reporting fourth-quarter earnings that declined year over year, but nonetheless beat analyst estimates.

Expected to report profits of $0.88 per share pro forma, Delta instead reported $0.96 per share in "adjusted profit." Sales of $10.25 billion for the fiscal fourth quarter likewise topped Wall Street's estimates.

Delta aircraft taking off

Image source: Delta Air Lines.

So what

Compared to what Delta did in 2016, Q4's performance was both better, and worse. Better, because sales increased 8% year over year. But worse, because net income declined by 8% to $572 million, and earnings per diluted share declined 5% to $0.80, per GAAP.

For the full fiscal year 2017, Delta reported $41.2 billion in revenue, a 4% increase relative to 2016. Net income declined 18% to $3.6 billion, and earnings per diluted share fell 15% to $4.95.

Now what

Delta also issued new guidance for the first quarter of 2018, currently under way. Management is predicting that it will grow sales 2.5% to 4.5% relative to Q1 2017 (so about $9.5 billion), earn a 6% to 8% pre-tax operating profit margin on those revenues, and end up with earnings per diluted share of between $0.60 and $0.80, per GAAP.

Relative to the $0.82 per share that Delta earned in Q1 2017, this suggests investors should get ready to see another decline in profits, despite enjoying yet another rise in revenue.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.