Delta Air Lines (NYSE:DAL) is one of the largest airlines in the world, offering travel throughout the U.S. and across the globe. After decades of tough operating conditions for the airline industry that saw numerous bankruptcy filings from the industry's largest players -- including Delta -- the advent of consolidation among airlines and the imposition of baggage fees and other ancillary charges have helped make Delta and its peers more profitable than ever.

Delta's profit renaissance has made many investors interested in the stock. But it's still essential to look at the airline's future growth opportunities and current financial condition more closely to make sure that its fundamental health remains strong. The following look at some key factors can help you make a more informed decision about whether Delta's stock is a buy right now.

Delta aircraft as seen from left side, on a cloudy night near dusk on a white tarmac.

Image source: Delta Air Lines.

How Delta has flown higher

Delta has seen slow but steady revenue growth and consistently solid profits in recent years. Between 2012 and 2017, Delta sales climbed an average of about 2% per year, and net income has more than tripled over that time frame. Some of the tailwinds that helped make Delta more profitable -- in particular, low fuel costs -- have gone away more recently, and that's a big part of why 2017 profits were lower than Delta's bottom-line results in 2015 and 2016.

The airline industry tends to be cyclical, and during periods of prosperity, more players tend to enter the market and raise concerns about overcapacity. Delta's recent stock performance has been relatively flat, suffering to some extent as a result of those worries, along with broader issues on the geopolitical and macroeconomic fronts. Yet the airline has seen an uptick in revenue per available seat mile during the first part of 2018. And Delta is optimistic that favorable trends will offset any concerns and lead to better growth prospects for the remainder of the year. That won't stop competitors from trying to rain on Delta's parade, but the airline giant has done well in pushing back at competitive threats in the past, and should continue to do so.

A healthy balance sheet

The airline business is capital-intensive, but Delta's balance sheet is relatively strong. The company has less than $9 billion in long-term debt, and cash and short-term investments add up to almost $2 billion to offset that figure. Delta's long-term debt-to-equity ratio is just above 50%, and that's down considerably from the figures of 80% to 100% that prevailed in 2013 and 2014.

Delta has done a good job of managing its debt. It has taken advantage of low interest rates in order to finance the updating of its fleet to newer, more efficient aircraft, while not overextending itself financially. As interest rates start to rise, Delta has put itself in a position to pay down its debt steadily as necessary, and that could be instrumental in avoiding the debt-driven problems that have plagued airlines in past decades.

An inexpensive valuation

Delta stock looks dirt cheap right now when you look at ordinary earnings-based metrics. The stock is currently priced at less than 11 times trailing earnings, and its valuation gets even more attractive when you consider near-term future earnings expectations, giving Delta a forward multiple of less than 7.5.

Low multiples are typical in cyclical industries when investors believe that a company has hit a temporary spike in earnings and will see bottom-line contraction in the near future. It's true that Delta's profits have shrunk slightly over the past couple of years. But with signs of new opportunities for expansion in the future, it's not unreasonable to think that Delta will see earnings bounce from their recent slump. Even if net income stays flat, the low multiple offers a nice margin of safety for Delta.

Solid dividends

Airlines aren't traditionally huge dividend payers, preferring to reinvest capital into fleet upgrades and other capital spending. Yet Delta stands out with a solid dividend yield of 2.3%, and the airline has done an amazing job of growing its payout recently. Just since 2014, the company has quintupled its payout, going from $0.06 per share quarterly to $0.305 per share. That includes a 50% hike late last year, the fourth annual 50% increase in a row for Delta.

Delta won't be able to sustain that level of growth forever, but it still has capacity for further dividend hikes. The airline pays out less than 25% of its earnings as dividends. Income investors can have confidence in the company's ability to keep delivering on the dividend front, especially as industry conditions begin to improve.

A solid pick among airlines

Overall, Delta Air Lines has a number of favorable traits that make it a buy for investors looking for exposure to the industry. The airline business is always vulnerable to economic downturns. But the potential rewards from a new cycle of growth for Delta outweigh the downside risks currently, especially given the stock's cheap share price right now.

Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.