Buy, Sell, or Hold Delta Air Lines Stock After Q3 Earnings?

Delta Air Lines DAL) reported somewhat disappointing third-quarter results on Friday, missing both earnings and revenue expectations as surging fuel costs pressured profitability despite record revenue and resilient travel demand.

Despite strong pricing power and continued momentum in premium travel, Delta lowered its full-year earnings outlook, raising concerns about the airline industry's ability to offset elevated operating expenses.

Delta's Subpar Q3 Results

Delta posted adjusted Q3 earnings of $1.72 per share, missing the Zacks EPS Consensus of $1.80 by 4%. Earnings were essentially flat compared with $1.71 per share in the year-ago quarter.

Adjusted revenue increased 16% year over year to a record $17.59 billion but also fell short of expectations of $17.71 billion. Premium and loyalty revenue each climbed 18%, reflecting continued strength among higher-spending travelers.

However, adjusted fuel expenses surged 62% YoY to $4.14 billion, significantly limiting profitability despite stronger ticket pricing and disciplined capacity management.

Delta's Outlook Reflects Industry Challenges

Looking ahead, Delta expects Q4 revenue to increase 20% YoY, with adjusted earnings projected between $1.15 and $1.65 per share.

That said, management lowered its full-year adjusted EPS outlook to $5.10-$5.60 from $6.50-$7.50, while reducing expected free cash flow to $2.5 billion from $3-$4 billion.

CEO Ed Bastian emphasized that travel demand remains strong, particularly as consumers prioritize experiences. Delta also reported double-digit corporate sales growth during Q3, while more than 90% of surveyed corporate customers expect travel spending to remain steady or increase in 2027.

Nevertheless, Delta expects to absorb approximately $6 billion in additional fuel costs this year, underscoring the challenges facing the broader airline industry even as carriers raise fares and limit capacity to preserve margins.

DAL Performance & Valuation Comparison

Delta has been the clear outperformer among major U.S. airlines in 2026, with DAL shares still up more than 15% year to date. By comparison, United Airlines UAL) stock has slipped roughly 4%, while American Airlines AAL) has declined over 15%.

In the last two years, DAL’s gains of 60% have trailed UAL’s nearly 80% return, although both premium carriers have vastly outperformed AAL and the broader market.

At current levels near $80 a share, DAL trades at roughly 13X forward earnings, putting it on par with UAL and at a slight discount to the Zacks Transportation-Airline Industry.

AAL, meanwhile, is now expected to post an adjusted loss this year but, like DAL and UAL, trades at less than 1X forward sales.

Bottom Line

Delta's record revenue and resilient travel demand are encouraging, but rising fuel expenses and sharply reduced earnings guidance overshadow its operational strengths and reasonable valuation.

Keeping this in mind, DAL currently lands a Zacks Rank #5 (Strong Sell), reflecting unfavorable earnings estimate revisions. For now, investors may be better off avoiding the stock until profitability expectations stabilize.

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

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