Investors have been watching inflation closely, and it appeared that they weren't entirely comfortable with what they saw from the Bureau of Labor Statistics on Thursday morning. The Consumer Price Index rose 0.4% in the month of September, keeping its year-over-year rise at 3.7%. That's well above the 2% target from the Federal Reserve, and stock index futures responded by giving up a substantial part of their gains from earlier in the morning.
In addition to inflation data and the Fed, investors are looking closely for signs of how the economy is doing. Earnings reports from the third quarter will play a big role in setting the tone for the market, and the current trickle of financial numbers will turn into a torrent in the days and weeks to come. On Thursday morning, Delta Air Lines (DAL 0.08%) and Fastenal (FAST 0.04%) reported their latest financial results, and shareholders were generally happy with what they saw. Here are the details you need to know.
Delta gains altitude on strong travel demand
Shares of Delta Air Lines were up more than 3% in premarket trading Thursday morning. The airline giant reported third-quarter financial results that showed the current strength of the travel industry, but Delta also warned that the good times might not last forever.
Delta's numbers from the summer months were generally impressive. Adjusted operating revenue rose 13% year over year to $14.6 billion, setting a new record for the company. Adjusted net income came in even better, with Delta making $1.31 billion for the quarter. That was up 35% from the year-ago period, and it worked out to adjusted earnings of $2.03 per share.
Travel demand has been high ever since COVID-19 pandemic restrictions started to lift, and Delta saw strong momentum continue in the quarter that ended Sept. 30. Unit revenue was at the high end of previous guidance, although total revenue per available seat mile (TRASM) was down 2.5% from year-ago levels. That shows just how busy 2022 was for the airline, though, and international passenger revenue soared 35% on strong gains in travel across the Atlantic Ocean.
Delta has high hopes that demand momentum will continue through the end of the year, with its fourth-quarter guidance calling for total revenue growth of 9% to 12% and adjusted earnings of $1.05 to $1.30 per share. That would leave Delta having earned $6 to $6.25 per share for the year, and for a stock trading well below $40 per share, many investors will conclude that the airline's valuation is too good to pass up.
Fastenal points to a strong industrial economy
Shares of Fastenal, meanwhile, climbed 4%. The distributor of industrial and construction supplies reported third-quarter financial results suggesting that much of the industrial sector remains strong even in the face of macroeconomic pressures.
Fastenal posted revenue of $1.85 billion for the quarter, up 2.4% from year-ago levels. Sales performance would have been stronger were it not for the fact that there was one less business day in this year's third quarter than in the corresponding period last year. Net income came in at $295.5 million, with adjusted earnings of $0.52 per share climbing 4% year over year.
A closer look at Fastenal's results showed some disparities across various industries. Demand from heavy manufacturing clients was particularly strong, with Fastenal seeing sales gains of 9% in that area. However, sales for nonresidential construction customers were down 7.2% from year-ago levels, and resellers also pulled back on purchases of Fastenal's goods as well.
Fastenal's stock has been a steady performer lately, and its financial success suggests that the manufacturing sector is in better shape than some have feared. That could bode well for prospects for 2024 across the industry.
