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Delta released its earnings reports and, as expected, they are dreadful.
But that doesn’t mean it’s not a time to buy. Or even a great time to buy.
Here’s how to know if it is a good time to buy.
To find out, we start with the earnings.
The Delta earnings report showed just how bad a spot airlines are in.
Few industries hit harder than the airlines industry during the current pandemic than airlines.
People just aren’t flying.
According to the Transportation Security Administration (TSA) there were 2,317,763 passengers on this day last year.
Yesterday there were just 717,940.
That’s a 69% drop in total passengers.
But worse than drop in traffic, people aren’t flying the most lucrative international routes to Europe and Asia.
That’s why Delta reported a 76% drop in revenues compared to the same quarter last year.
In fact, analysts had been expecting Delta’s revenue to decline from $12.5 billion in the same quarter a year ago to $3.1 billion this quarter.
Delta came up a little bit short though with $3.06 billion.
This decline in revenues sent Delta’s loss for the quarter to $5.4 billion and increased total pandemic net losses to over $11 billion.
Worse yet, the President of Delta warned analysts and investors that he expects it to take “two years or more” for air travel volume and revenues to get back to normal.
All around, it was bad and it was totally to be expected.
But again, this report doesn’t mean it’s not a buying opportunity in Delta or other similar situations.
Here’s how to tell when that is.
Delta’s shares actually went down after the report.
That’s the key right there.
We all know the airlines are a financial disaster area.
However, we didn’t know how the market was pricing in this downturn until we saw Delta’s stock fall almost 3% on top of the stock that was already down 49%.
That is a sign that there is still some hope in Delta’s stock.
Earlier we said:
The best time to buy a stock is when the company reports terrible news and its stock has already fallen so much, has such low expectations, that it actually goes up.
That didn’t happen here.
We got the terrible news, but not the stock going up.
As a result, it’s probably still too early to buy the Delta and other airline stocks.
This will be a great buy eventually. Airlines will be a good business again.
But if you want to buy low and sell high, there’s probably going to be more chances to buy even lower.
To your wealth,
Dynamic Wealth Research
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