Delta Airlines Stock Does Candle Over Candle Reversal

Delta Airlines stock has formed a candle over candle reversal on the chart. The large players volume is uptrending and the CMF has just broken above the zero line.

Five years ago, Delta Air Lines bought a refinery to protect against the risk of high crack spreads. In the wake of Hurricane Harvey, Delta’s move now looks brilliant as it totally insulated itself against crack spreads, something their competitors did not do.

Hurricane Harvey has pushed the crack spread up more than 100% at the beginning of September. The crack spread has since come down but it is still at a very elevated level as the chart below shows.

Oil crack spread chart

Delta’s refinery wasn’t impacted because it is located in Pennsylvania. Based on the Trainer refinery’s capacity of 182,000 barrels per day, a $16-per-barrel jump in the crack spread would boost its profit by $3 million per day! Motley Fool published this article on Delta’s crack spread advantage.

Delta Airlines Stock

Delta Airlines Stock

Delta Airlines looks like a good setup. There is reduced volatility while prices have been consolidating in the most recent period. There is a resistance zone just above the current price starting at $48.26. I would prefer waiting for Delta stock to break above its moving averages for an entry around $49.50. Right above this resistance zone may be a good entry point.

If Delta’s stock pulls back because we are still in the weak time of the year for the stock market, you don’t want to be down big in your position. I did a lesson on buying oversold stocks here and I talk about how you don’t want to ever make a stock your own personal Vietnam. By patiently waiting for a break above all the moving averages at around $49.50 before taking an entry, we can better protect against a bad entry in Delta Airlines stock.

Delta Airlines stock

Notice how institutional traders played the $47.75 stop loss level. They took DAL down and ran the stops at around $47.75. Once the stops were cleared, they covered their short positions which pushed DAL higher. I think the new stop loss level has to be the $47.42 level.

Delta Airlines Review
2.3

Summary

Profitability

DAL's Return On Assets of 7.16% is among the best of the industry. DAL does better than the industry average Return On Assets of 6.17%. DAL's Return On Equity of 27.51% is among the best of the industry. DAL does better than the industry average Return On Equity of 18.65%. DAL's Profit Margin of 9.30% is inline with the rest of the industry. The industry average Profit Margin is 8.55%. DAL has a Piotroski-F score of 4.00. This indicates an average health and profitability for DAL.

Valuation

With a Price/Earnings Ratio of 9.58, the valuation of DAL can be described as very reasonable. Compared to an average industry Price/Earning Ratio of 11.51, DAL is valuated a bit cheaper than its industry peers. With a Forward Price/Earnings Ratio of 9.11, the valuation of DAL can be described as very reasonable. When comparing the current price to the book value of DAL, we can conclude it is valued correctly. It is trading at 2.60 times its book value. When comparing the price book ratio of DAL to the average industry price book ratio of 2.59, DAL is valued inline with its industry peers. The high PEG Ratio, which compensates the Price/Earnings for growth, indicates DAL does not grow enough to justify the current Price/Earnings ratio.

Growth

The Earnings Per Share has been growing by 33.52% on average over the past 5 years. This is a very strong growth. The EPS growth is accelerating: in the next 2 years the growth will be better than in the last years. DAL is expected to show a small growth in Earnings Per Share. In the coming 2 years, the EPS will grow by 0.66% yearly. The Revenue has decreased by -1.06% in the past year. DAL shows a small growth in Revenue. Measured over the last 5 years, the Revenue has been growing by 1.69% yearly. The earnings per share for DAL have decreased strongly by -17.75% in the last year.

Health

The Debt to Equity ratio for DAL is way better than the industry averages. The Piotroski-F score of DAL is 4.00. This is a neutral score and indicates average health and profitability for DAL. A Current Ratio of 0.43 indicates that DAL may have some problems paying its short term obligations. Compared to an average industry Current Ratio of 0.82, DAL is worse placed to pay its short term obligations than its industry peers. 82% of its industry peers have a better Current Ratio. DAL has a Quick Ratio of 0.43. This is a bad value and indicates that DAL is not financially healthy enough and could expect problems in meeting its short term obligations. Compared to an average industry Quick Ratio of 0.80, DAL is worse placed to pay its short term obligations than its industry peers. 82% of its industry peers have a better Quick Ratio. Based on the Altman-Z score of 1.67, we must say that DAL is in the distress zone and has some risk of bankruptcy. When comparing the Altman-Z score of DAL to the average industry Altman-Z score of 2.21, DAL is less financially healthy than its industry peers.

Fundamental analysis provided by Chartmill. Get instant fundamental analysis on your favorite stocks here.

Sending
User Rating 0 (0 votes)
Follow me

Lance Jepsen

For ethical purposes, I try not to hold any position in any stock I profile on GuerillaStockTrading.com unless specifically stated in the article. Owner of GuerillaStockTrading.com. Seasoned entrepreneur, investor, and writer. I love God, family, country, stock trading, economics, and helping people learn how to trade.
Follow me

Author: Lance Jepsen

For ethical purposes, I try not to hold any position in any stock I profile on GuerillaStockTrading.com unless specifically stated in the article. Owner of GuerillaStockTrading.com. Seasoned entrepreneur, investor, and writer. I love God, family, country, stock trading, economics, and helping people learn how to trade.

Leave a Reply