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Why Investors Were Disappointed with Delta's 2Q17 Results

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Why Investors Were Disappointed with Delta's 2Q17 Results PART 1 OF 7

Why Delta Air Lines Stock Fell after Second Quarter Earnings

Snapshot

Delta Air Lines (DAL) reported its 2Q17 results on July 13, 2017. Both revenue and profits missed Wall Street estimates. The airline’s revenue rose 3.3% year-over-year (or YoY) to $10.8 billion, missing analysts’ estimates of $11.1 billion in revenue. Its adjusted earnings per share fell to $1.64, missing analysts’ estimates of $1.65 in EPS.

Why Delta Air Lines Stock Fell after Second Quarter Earnings

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For more detail on analysts’ expectations, you can read our pre-earnings analysis on Delta, What Can Investors Expect from Delta Air Lines in 2Q17?

Stock falls

As a result of missing analysts’ estimates, the airline’s stock fell about 1.8% during the results day to end at $54.5 at closing hours. After market hours, the stock was down a further 0.09%. Most other airlines stocks fell on the same day. Allegiant Travel (ALGT) lost 1.7%, Alaska Air Group (ALK) lost 0.94%, and United Continental (UAL) lost 0.5%. Southwest Airlines (LUV) also lost 0.1% on the same day, while American Airlines (AAL) was flat at 0.02%. Spirit Airlines (SAVE) rose 0.4%, and JetBlue Airways (JBLU) was the highest airline gainer at 1.4%.

The Consumer Discretionary Select Sector SPDR Fund (XLY) was flat at 0.01% on July 13, 2017. We compare airlines to the consumer discretionary sector, as the airline industry is dependent on consumer spending. The broader market tracked by the SPDR S&P 500 ETF (SPY) rose 0.17%.

Series overview

In this series, we’ll analyze DAL’s performance for 2Q17. We’ll also discuss what factors are expected to drive DAL’s growth in 2017. We’ll wrap up the series with a discussion on DAL’s valuation multiple.

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