While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use fundamental analysis and traditional valuation metrics to find s ...

Group 1 - The company has been rebranded as "Lufthansa Group" to reflect its transformation [1] - The article suggests a positive outlook for Deutsche Lufthansa AG, indicating it is expected to "Fly Higher" [1] Group 2 - The analysis is aimed at buy-side hedge professionals focusing on fundamental, income-oriented, long-term analysis across sectors globally [1]

Financial Data and Key Metrics Changes - The company reported a revenue increase of 6% to €37.6 billion, marking a new record [13] - Adjusted EBIT for the full year amounted to slightly more than €1.6 billion, a decline of around 40% compared to the prior year [26] - Net income for the full year was €1.4 billion, with a proposed dividend payment of €0.30 per share, resulting in a payout ratio of 26% [28] Business Line Data and Key Metrics Changes - Lufthansa Airlines experienced a loss of €94 million, significantly impacting the overall group's performance [15] - SWISS exceeded the adjusted EBIT mark of €800 million for the second time, while Eurowings achieved an adjusted EBIT of above €200 million [14] - Lufthansa Technik reported an adjusted EBIT of €635 million, slightly above the previous year's level [46] Market Data and Key Metrics Changes - The global aviation industry is expected to surpass $1 trillion in revenues for the first time, with over 5 billion passengers projected to travel by air [12] - The company expanded its capacity by 8.5% in 2024, although this was significantly lower than the 16% growth in 2023 [29] - The load factor remained stable, with peak values reaching above 90% during the record-breaking summer [13] Company Strategy and Development Direction - The company aims for further internationalization, highlighted by the acquisition of a 41% stake in ITA Airways, marking a significant milestone [7] - A turnaround program has been initiated to address the challenges faced by Lufthansa Airlines, focusing on operational stability and efficiency improvements [11][35] - The company plans to shift capacity growth to more efficient airlines and enhance operational efficiency through various measures [39][42] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about a turnaround in the second half of 2024, with significant improvements in operational stability and customer satisfaction [9][10] - The company anticipates a moderate capacity growth of around 4% in 2025, supporting revenue growth and stabilizing operations [55] - Despite facing cost headwinds, management expects significant improvement in adjusted EBIT for 2025 compared to 2024 [56] Other Important Information - Irregularity costs increased substantially, amounting to over €840 million, driven by strikes and operational instability [26] - The company has hedged 79% of its fuel needs for 2025, which is expected to mitigate potential price escalations [54] - The company is committed to maintaining a full investment-grade rating and has issued a hybrid bond to strengthen its rating profile [52] Q&A Session Summary Question: Can you provide clarity on capacity and profitability expectations for 2025? - Management expects double-digit growth compared to 2024, with moderate capacity growth of around 4% [76][78] Question: What is the status of the ITA integration and potential acquisition of the remaining stake? - The company can call the remaining 49% stake as early as summer 2025, but no decision has been made yet [80] Question: What is the current status of the feeder contract with Condor and NPS trends? - The agreement with Condor was canceled, and the NPS has improved by 10 points over the winter [86][88] Question: How are discussions with crew regarding productivity progressing? - Talks are ongoing, but unions are insisting on restrictions that the company is not willing to accept [114][118] Question: What is the outlook for cargo profitability given potential market changes? - Management remains optimistic about cargo profitability, citing strong demand and the unpredictability of global supply chains [120][123]

Group 1 - The report titled "Enterprise Tech Ecosystem Series: Deutsche Lufthansa AG - 2024" provides insights into Lufthansa's technology activities, including digital transformation strategies, innovation programs, technology initiatives, investments, and acquisitions [1][4] - Lufthansa operates as a multinational aviation company with two main segments: passenger airlines and aviation services [2] - The passenger airlines segment includes various commercial airline brands such as Lufthansa Airlines, Brussels Airlines, SWISS, and others, while the aviation services segment encompasses logistics, maintenance repair and overhaul (MRO), and other business divisions [3] Group 2 - The report covers key topics such as digital transformation strategy, technology initiatives, investments, acquisitions, and partnerships [4][6] - Insights into Lufthansa's technology operations include details on estimated ICT budgets and major ICT contracts [6] - The report lists various companies involved in Lufthansa's technology initiatives, including Google Cloud, BMW, Airbus, and others [6][8]

Group 1 - Lufthansa has faced significant challenges over the past decade, particularly due to the COVID-19 crisis which severely impacted the airline industry [1] - The ongoing Ukraine war has further complicated matters for EU airlines, as it has resulted in the loss of access to Russian airspace [1]

Core Viewpoint - Momentum investing focuses on "buying high and selling higher," contrasting with traditional strategies of "buying low and selling high" [1] Group 1: Momentum Investing Strategy - Momentum investing can be risky as stocks may lose momentum when their valuations exceed future growth potential [1] - A safer approach involves investing in bargain stocks that exhibit recent price momentum, identified through the Zacks Momentum Style Score [2] Group 2: Deutsche Lufthansa AG (DLAKY) Analysis - DLAKY has shown a price increase of 2.5% over the past four weeks, indicating growing investor interest [3] - The stock gained 11.2% over the past 12 weeks, demonstrating its ability to deliver positive returns over a longer timeframe [4] - DLAKY has a beta of 1.24, suggesting it moves 24% higher than the market in either direction [4] - The stock has a Momentum Score of A, indicating a favorable entry point for investors [5] - DLAKY has a Zacks Rank 2 (Buy) due to upward revisions in earnings estimates, which attract more investor interest [6] - The stock is trading at a Price-to-Sales ratio of 0.21, meaning investors pay 21 cents for each dollar of sales, indicating a reasonable valuation [6] Group 3: Investment Opportunities - DLAKY is highlighted as a strong candidate for investment, with potential for further price appreciation [7] - There are additional stocks that meet the criteria of the 'Fast-Paced Momentum at a Bargain' screen, suggesting more investment opportunities [7] - Zacks offers over 45 Premium Screens to help identify winning stock picks based on various investing styles [8]

Financial Data and Key Metrics Changes - The company achieved a revenue of €10.7 billion in Q3 2024, marking a 5% increase compared to the previous year, making it the strongest quarterly revenue in the company's history [14][39] - Adjusted EBIT for Q3 was €1.3 billion, reflecting a decrease of approximately 9% year-on-year [40] - Adjusted free cash flow was positive at €128 million, significantly lower than the previous year due to lower operating results and higher tax payments [59] Business Line Data and Key Metrics Changes - All passenger airlines within the group reported positive results, with Austrian, Brussels, and Eurowings achieving record results [18] - Lufthansa Airlines, however, faced challenges, posting an adjusted EBIT of approximately €400 million, a decrease of over 36% compared to the previous year [45][46] - Lufthansa Cargo profits increased significantly, driven by strong demand from Asia Pacific, with freight yields remaining over 40% above pre-crisis levels [53][54] Market Data and Key Metrics Changes - Capacity offered in the passenger airlines segment reached around 94% of pre-crisis levels, a 6 percentage point increase compared to the prior year [41] - Yields overall declined by 3.5%, with Asia Pacific yields down almost 14% due to strong competition from Chinese carriers [42][43] - The company observed a solid demand environment, with bookings for November up by 70% and December by 55% [81] Company Strategy and Development Direction - The company aims to strengthen its position as Europe's number one airline while addressing regulatory challenges [13] - A comprehensive turnaround program has been initiated for Lufthansa Airlines, targeting efficiency improvements and cost reductions, with an expected positive EBIT effect of up to €1.5 billion by 2026 [48][49] - The company is focused on fleet modernization, with 250 new aircraft on order, which will significantly reduce fuel consumption and CO2 emissions [31][32] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the stable market outlook for the aviation industry, despite operational challenges and external factors affecting Lufthansa Airlines [9][12] - The company expects to achieve an adjusted EBIT guidance range of €1.4 billion to €1.8 billion for the full year 2024, with adjusted free cash flow expected to be significantly below €1 billion [67] - The management emphasized the importance of operational stability and customer satisfaction as key to future growth [33] Other Important Information - The company has recruited over 5,600 new employees in the last 18 months to stabilize operations post-COVID [24] - The Digital Hangar initiative has led to significant improvements in customer experience, with the airline app being named the best airline app in the world [27][29] - The company is optimistic about completing the acquisition of ITA, which will enhance its market presence in southern Europe [71] Q&A Session Summary Question: Demand environment for winter months - Management noted solid demand driven by leisure and premium classes, with Eurowings performing strongly [81] Question: Clarification on turnaround program figures - The €1.5 billion is a gross measure for 2026, with expectations for a ramp-up in 2025 [85] Question: Capacity outlook for Lufthansa Airlines - Lufthansa Airlines is expected to operate at 84% of pre-crisis capacity, with slower growth due to profitability concerns [86] Question: Cost pressures from suppliers - Frankfurt Airport has increased charges significantly, leading to slower growth at that hub [92] Question: Airfreight and tariff impacts - The company is shifting freighter capacity towards Asia, particularly China, due to strong e-commerce demand [96]

Q3 2024 Results Carsten Spohr, CEO Till Streichert, CFO Frankfurt, 29 October 2024 LUFTHANSA GROUP Q3 2024 Results Carsten Spohr, CEO Review Q3 Frankfurt, 29 October 2024 Disclaimer IMPORTANT: The following applies to this document and the oral presentation of the information in this document by Deutsche Lufthansa Aktiengesellschaft (the "Company", and together with its consolidated subsidiaries, the "Group") or any person on behalf of the Company, any question-and-answer session that follows the oral prese ...

Core Insights - Deutsche Lufthansa AG is one of the largest players in the global aviation industry, with a strong position in the EU market, operating multiple airlines and divisions including Lufthansa Technik and Cargo [1][2] - The company is viewed as an attractive investment opportunity due to a positive demand trajectory post-COVID-19, an agreement with the pilot union, and a strengthened balance sheet allowing for dividend payments [1][2] Industry Overview - The EU aviation industry is experiencing production challenges from Boeing and Airbus, leading to capacity constraints and labor shortages, which may limit new entrants and promote rational competitive behavior [2] - The consolidation trend observed in the US airline industry is expected to extend to Europe, enhancing the investability of companies like Lufthansa [2] Company Performance - Approximately 60% of Lufthansa's EBIT is derived from airline transportation, with over 30% from the Technik division and less than 10% from cargo [2] - The Technik division, the largest MRO provider globally, has shown stable profitability with a growth rate exceeding 6% over the last decade, despite a lower adjusted EBIT margin of 10.8% in Q2 [2][3] - Q2 2024 results showed a net profit of €469 million, a 47% decrease from €881 million in Q2 2023, attributed to ticket price normalization, although revenues increased by 7% due to higher capacity and MRO performance [3][5] Financial Outlook - The company expects adjusted core operating profit for 2024 to be in the range of €1.4 to €1.8 billion, with a single-digit percentage decline in Q3 earnings compared to 2023 [3][6] - Despite ongoing challenges, the company is projected to achieve a positive trajectory in 2025, with a focus on optimizing operations and reducing costs [3][4] Valuation - Deutsche Lufthansa is currently trading at a forward EV/EBITDA of 3.3x, below its historical range of 3.6x to 7x, indicating a potentially undervalued position [4] - The estimated enterprise value is €17.55 billion, with an equity value of €9.45 billion, suggesting a potential capital appreciation of 35% [4]

Financial Data and Key Metrics Changes - The company reported revenues exceeding €10 billion in Q2 2024, marking a 7% increase compared to the previous year, driven by an 11% increase in capacity [18] - Operating expenses rose by 10% due to higher production levels and general cost inflation, resulting in an operating result of €686 million, a decrease of €400 million year-on-year [18] - Adjusted EBIT for the first half of the year is expected to be between €1.4 billion and €1.8 billion, down from previous guidance of €2.2 billion [36] Business Line Data and Key Metrics Changes - The Passenger Airlines segment's operating results fell to €581 million from €965 million last year, primarily due to a 5.3% decrease in unit revenue [22] - Lufthansa Airlines specifically saw a significant decline in adjusted EBIT, achieving less than half of its previous year's performance [24] - Lufthansa Technik reported a 15% revenue increase in Q1 followed by another 16% in Q2, achieving record results [33] Market Data and Key Metrics Changes - The overall capacity growth in the market was 12% in Q2, while the company's capacity grew by 11%, indicating strong demand for air travel [20] - Yields in Asia dropped nearly 10% due to high capacity growth from Chinese carriers, while North America saw a more stable yield decline of 2.6% [21] - The leisure travel segment has recovered faster than corporate travel, with corporate travel expected to lag behind pre-crisis levels for several years [21] Company Strategy and Development Direction - The company is focusing on modernization rather than restructuring, with a turnaround program aimed at improving efficiency and profitability [48] - Strategic milestones include the launch of Lufthansa City Airlines to enhance cost efficiency and the acquisition of ITA to expand market presence [14][15] - The company aims for an 8% EBIT margin in the long term, with a focus on premium services and operational improvements [65] Management Comments on Operating Environment and Future Outlook - Management acknowledged that the first half of the year did not meet expectations due to strikes and operational challenges, but expressed optimism about future demand, especially in premium cabins [5][43] - The company expects a positive result for the year driven by sustained demand and strong performance in Lufthansa Technik [43] - Future capacity planning will be adjusted to support yield development, with a focus on maintaining unit costs [60][38] Other Important Information - The company has implemented a liability-driven investment strategy to manage pension obligations and net debt, which has slightly decreased [35] - Free cash flow generation was better than operating results suggested, supported by robust summer season bookings [34] Q&A Session Summary Question: Financial targets associated with the transformation plan - The company aims for an 8% margin as a long-term target, which is essential for future viability [45] Question: Costs of restructuring and plans for AirPlus proceeds - The company clarified that it is focusing on modernization rather than restructuring, with plans to invest proceeds from AirPlus into core business areas [47][52] Question: Capacity ramp-up and profitability outlook - Management indicated that while capacity growth may not reach 100% of 2019 levels, yield is prioritized over growth to enhance profitability [60] Question: Regional performance and unit cost development - The company noted that the Middle East market is facing challenges, while unit costs are expected to remain flat despite inflationary pressures [70]