Does Delta Air Lines' Q4 Earnings Beat Justify a Buy Decision Today?

Core Insights - Delta Air Lines reported strong fourth-quarter 2025 results, driven by diversified revenue streams, solid international travel demand, and corporate sales growth [2][10] - The company achieved earnings of $1.55 per share, surpassing estimates, despite a year-over-year decline due to high labor costs [3][10] - Revenue for the quarter reached $16 billion, exceeding expectations and reflecting a 2.9% year-over-year increase [4][10] Financial Performance - Earnings per share (EPS) for Q4 2025 was $1.55, beating the Zacks Consensus Estimate of $1.53, but down 16.22% year-over-year due to increased labor costs [3] - Total revenues were $16 billion, surpassing the Zacks Consensus Estimate of $15.63 billion, with adjusted operating revenues at $14.6 billion, a 1.2% increase year-over-year [4] - The company maintained a strong earnings surprise record, exceeding estimates in the past four quarters with an average surprise of 7.94% [5] Fleet Expansion - Delta Air Lines has agreed to acquire 30 Boeing 787-10 widebody aircraft, with options for an additional 30, expected to enhance long-haul capabilities starting in 2031 [6][7] - This acquisition is part of Delta's international growth strategy, aimed at strengthening its global footprint and supporting overseas expansion [7] Cost Structure and Challenges - Total operating expenses rose 5% year-over-year to $14.5 billion, driven by inflationary pressures despite lower fuel and maintenance costs [14] - Salaries and related costs increased 11% year-over-year to $4.59 billion due to a new pilot contract ratified in 2023 [14] - Non-fuel unit costs (CASM-Ex) increased by 4% year-over-year to 14.27 cents, indicating ongoing cost pressures [15] Valuation Concerns - Delta Air Lines' stock is considered unattractive from a valuation perspective, with a forward 12-month price-to-sales ratio of 0.70X, higher than the industry average of 0.59X [16] Investment Outlook - While Delta Air Lines delivered impressive results, potential investors are advised to exercise caution due to ongoing challenges and monitor the company's progress for a more favorable entry point [19]