Why Delta Air Lines Stock Fell after Q4 Earnings

Delta Air Lines (DAL) reported its fourth quarter 2016 results on January 12, 2016. The airline’s revenue fell 0.5% year-over-year or YoY to $9.5 billion while its adjusted earnings per share also fell from $1.25 to $0.84, as adjusted profit after tax also fell 37% year-over-year or YoY to $622 million.

DAL beat analyst consensus estimates on revenues, and earnings were in line with analysts’ estimates. Analysts had estimated revenues of $9.35 billion and earnings per share of $0.85.

For more details on analysts’ expectations, you can read our pre-earnings analysis on Delta, What Can Investors Expect from Delta Air Lines’s 3Q16 Earnings?

The airline saw its stock fall about 1.1% during the day of the report to end at $50.9. After market hours, Delta Air Lines stock was down a further 0.18%. Most other airlines stocks also lost value on the same day. JetBlue Airways (JBLU) lost 4.2%, Allegiant Travel (ALGT) lost 1.9%, United Continental (UAL) lost 1.4%. Southwest Airlines also lost 1.3% on the same day, while American Airlines (AAL) lost 1.1% and Alaska Air Group (ALK) lost 0.57%. Spirit Airlines (SAVE) was the only airline to gain 0.43% on the day.

The Consumer Discretionary Select Sector SPDR Fund (XLY) fell slightly by 0.1% on January 12, 2016. We compare airlines to the consumer discretionary sector as the airline industry depends on consumer spending. The broader market tracked by the SPDR S&P 500 ETF (SPY) also fell 0.25%.

In this series, we’ll analyze DAL’s performance for 4Q16. We’ll also discuss what factors are expected to drive DAL’s growth in 2017. Finally, we’ll wrap up the series with a discussion of DAL’s valuation multiple.