What happened

Delta Air Lines (DAL 0.43%) 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.