Delta Vs United: Which Airline Stock is the Better Investment for 2026?

Airline stocks have been on a tear going into 2026, with Delta Air Lines DAL and United Airlines UAL standing out in particular.

As two of the most efficient airlines, United and Delta have led the rally, which coincided with news that air travel was at record-breaking levels during Thanksgiving and Christmas.

Air travel demand has continued to hit new peaks since the Covid-19 pandemic, along with Delta and United’s revenue, making it a worthwhile topic of which airline stock may be the better investment.  

Profitability & Liquidity Comparison

Delta and United stock are usually the go-to options in a high-cost, highly competitive industry that can be cyclical and economically sensitive. 

The Zacks Transportation-Airline Industry has a low trailing twelve-month (TTM) net margin average of 4.85%, with Delta’s 7.36% being the highest among the major domestic carriers, followed by United’s 5.64%. Notably, American Airlines AAL and Southwest Airlines LUV have TTM net margins that are barely above 1%.

While it's harder for airlines to produce profits compared to other industires, Delta and United are very effective when it comes to turning a large portion of their operating profits into actual free cash flow (FCF) despite being in a capital-intensive industry that constantly requires huge investments for aircraft purchases and maintenance.

Airliners tend to have a lower return on invested capital (ROIC) as well, and capital expenditures consume a massive portion of their operating cash flow. However, Delta and United have surprisingly high FCF conversion rates that are above the preferred threshold of 80%.

United has the edge here with a very impressive FCF conversion rate of 130% as shown below. Notably, analysts view the high FCF conversion as a sign of earnings quality and that a company is better positioned to handle economic downturns. To that point, more cash is available for debt repayment, acquisitions, reinvestment, or to reward shareholders, as Delta and United usually do so through share buybacks.    

Tracking Delta and United’s Outlook

Delta is now thought to have ended fiscal 2025 with annual earnings dipping to $5.82 per share compared to EPS of $6.16 in 2024. That said, Delta’s FY26 EPS is projected to rebound and soar 23% to what would be a new record of $7.17. Delta’s sales are expected to be up 2% for FY25 and are projected to increase another 3% this year to $65.19 billion. Delta will be reporting its Q4 2025 results next Tuesday, January 13.

As for United, FY25 EPS is expected at $10.48 versus record earnings of $10.61 per share in 2024. United’s FY26 EPS is projected to spike 25% to a new peak of $13.15. Annual sales are expected to be up 3% for FY25 and are projected to increase another 9% in FY26 to $64.26 billion. United reports Q4 2025 results on Tuesday, January 20.

DAL & UAL Valuation Comparison

Making their favorable outlook more attractive is that Delta and United stock trade roughly on par with the industry average of 9X forward earnings and less than 1X forward sales despite being clear-cut leaders in the space. At over $100 a share, United still has a slightly lower P/E valuation than Delta stock, which trades at around $70. 

Conclusion & Strategic Thoughts

It’s still very intriguing to buy Delta and United stock, but favorable Q4 reports and guidance will be crucial in regard to the likelihood of more upside, as DAL and UAL have spiked nearly 10% in the last month. Both stocks currently land a Zacks Rank #3 (Hold) and still offer long-term value at their current levels, even with airline operators being prone to suppressed margins.  

United’s stock checks more boxes and typically delivers the stronger price performance, but for investors or hedge fund managers who prefer a smaller financial commitment, Delta shares may offer a more accessible way to pursue meaningful positions and compound returns.

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This article originally published on Zacks Investment Research (zacks.com).

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