In recent years, Delta Air Lines (NYSE:DAL) has been one of the most consistent U.S. airlines in terms of profitability. The company continued its run of strong performance last quarter, as revealed by the excellent Q3 earnings report it released on Thursday morning.

While Delta achieved record earnings last quarter, investors weren't impressed with its Q4 outlook, which calls for earnings per share to be roughly flat year over year. As a result, Delta stock moved lower on Thursday and has now fallen more than 11% in just the last few weeks.

DAL Chart

Delta Air Lines Year-to-Date Stock Performance, data by YCharts.

That said, investors shouldn't be worried about earnings growth stalling out permanently at Delta. And with the shares trading at a rock-bottom valuation, the recent pullback represents a great opportunity to buy Delta Air Lines stock at a big discount.

Another impressive quarter

Delta's third-quarter results came in slightly better than the updated forecast the company provided last week. Revenue per available seat mile (RASM) rose 2.5% and adjusted nonfuel unit costs increased 2.4%, in line with Delta's guidance update. However, Delta's adjusted fuel costs for the quarter came in at $1.96 per gallon, which was near the bottom of the carrier's updated guidance range of $1.95 to $2.05 per gallon.

As a result, adjusted earnings per share (EPS) reached $2.32, beating the company's updated forecast of $2.20 to $2.30. This represented a 29% increase from Delta's adjusted EPS of $1.80 in the third quarter of 2018.

Delta's earnings growth last quarter was driven primarily by an 11.5% decline in its average fuel price per gallon -- helped by strong profitability at Delta's oil refinery -- and a 3.2% passenger unit revenue increase in the domestic market. By contrast, unit revenue declined in the transatlantic and transpacific markets, due to the strong dollar and (in the latter case) the impact of the escalating U.S.-China trade war.

A Delta Air Lines plane landing on a runway

Delta's domestic routes are outperforming its international flights. Image source: Delta Air Lines.

The fourth-quarter outlook is more subdued

Delta Air Lines expects to post a weaker performance in the fourth quarter. RASM growth is set to slow to a range of 0% to 2%, due to the non-recurrence of accounting adjustments that boosted RASM a year ago. Meanwhile, nonfuel unit costs are on track to jump 4% to 5%. Fuel costs should decline substantially, though, falling from $2.42 per gallon in the prior-year period to between $2.00 and $2.20 per gallon this quarter.

The net result is that Delta expects to produce adjusted EPS between $1.20 and $1.50 in the fourth quarter, compared to $1.30 a year ago. (The Q4 2018 result was boosted by a $91 million asset-sale gain.) The midpoint of Delta's EPS guidance range is well below the average analyst estimate of $1.51.

Despite this projected slowdown in earnings growth, Delta is still on pace to post full-year adjusted EPS of approximately $7, up more than 20% year over year. This also makes Delta Air Lines stock exceptionally cheap, with a valuation of less than eight times earnings.

Delta has plenty of levers to pull

Delta should be able to continue growing its earnings next year. Most notably, the bulk of the company's unit cost inflation in the fourth quarter is being driven by one-time items. In 2020, the company will reap additional savings from its multiyear "One Delta" cost-cutting program, limiting nonfuel unit cost growth to between 2% and 3%, despite Delta's plan to make substantial investments to improve customer service. Delta's fleet renewal initiatives should boost fuel efficiency, too.

On the revenue side, Delta Air Lines already has ample momentum in the domestic market. Its performance on international routes should improve over the course of 2020, thanks to several catalysts.

First, the carrier continues to add premium economy seating to its fleet of wide-body aircraft for international routes, with the rollout scheduled for completion in 2021. Second, Delta recently announced that it will spend $1.9 billion to buy a 20% stake in LATAM, as the first step toward forming a joint venture with the top airline in South America. This will significantly improve Delta's profitability and market share in the region. Third, Delta will shift its five remaining flights at Tokyo's Narita Airport -- representing about 20% of its transpacific capacity -- to the more desirable Haneda Airport next March, which should lift unit revenue.

Between these revenue catalysts and the likelihood of solid cost performance next year, Delta should be able to continue growing its earnings in 2020 -- albeit not at the same rate as in 2019. That makes Delta Air Lines stock a steal at its current bargain-basement price.