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

Core Insights - Airline stocks, particularly Delta Air Lines (DAL) and United Airlines (UAL), have experienced significant growth leading into 2026, driven by record-breaking air travel demand during the holiday seasons [1][2] Profitability & Liquidity Comparison - Delta and United are among the most efficient airlines, with Delta achieving a TTM net margin of 7.36%, the highest among major domestic carriers, while United follows with 5.64%. In contrast, American Airlines (AAL) and Southwest Airlines (LUV) have TTM net margins just above 1% [3] - Despite the capital-intensive nature of the airline industry, Delta and United effectively convert a large portion of their operating profits into free cash flow (FCF), with United boasting an impressive FCF conversion rate of 130%, exceeding the preferred threshold of 80% [4][5] Financial Outlook - Delta's fiscal 2025 EPS is projected to decline to $5.82 from $6.16 in 2024, but is expected to rebound by 23% in FY26 to a record $7.17. Sales are anticipated to increase by 2% in FY25 and by another 3% in FY26 to reach $65.19 billion [10] - United's FY25 EPS is expected to be $10.48, slightly down from a record $10.61 in 2024, with a projected 25% increase in FY26 EPS to $13.15. Annual sales are forecasted to rise by 3% in FY25 and by 9% in FY26 to $64.26 billion [11] Valuation Comparison - Delta and United stocks trade around the industry average of 9X forward earnings and less than 1X forward sales, making them attractive despite their leadership in the market. United's stock, priced over $100, has a slightly lower P/E valuation compared to Delta's stock, which trades around $70 [12] Strategic Considerations - Both Delta and United stocks are considered intriguing investments, with upcoming Q4 reports and guidance being crucial for potential upside. Both stocks have increased nearly 10% in the last month and currently hold a Zacks Rank 3 (Hold), indicating long-term value [14] - United's stock typically shows stronger price performance, while Delta may offer a more accessible investment option for those seeking smaller financial commitments [15]