Is It Time To Reassess Delta Air Lines (DAL) After Recent Share Price Moves

• If you are wondering whether Delta Air Lines is fairly priced or if the current share price leaves some value on the table, this article will walk you through what the numbers are saying about the stock.
• Delta’s share price recently closed at US$71.11, with returns of 10.6% over 1 year, 3.0% year to date, 1.0% over 30 days, and a 0.4% decline over the last 7 days. These figures may hint at shifting views on its growth prospects and risk.
• Recent headlines around Delta have focused on broader airline sector themes and company specific developments that can influence investor sentiment, such as capacity decisions, competitive positioning and regulatory or operational updates. Together, these factors help frame how the current price moves relate to expectations around Delta’s future performance.
• On Simply Wall St’s valuation checks, Delta scores a 5 out of 6. This suggests the stock screens as undervalued on most, but not all, of the inputs used. We will look at what different valuation approaches say about that score before finishing with a more holistic way to think about Delta’s value.

Find out why Delta Air Lines's 10.6% return over the last year is lagging behind its peers.

Approach 1: Delta Air Lines Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow, or DCF, model takes the cash Delta Air Lines is expected to generate in the future and discounts those projections back to what they could be worth in today’s dollars.

Delta’s latest twelve month free cash flow is about $3.16b. Analysts and extrapolated estimates used in this 2 Stage Free Cash Flow to Equity model project free cash flow reaching about $6.17b in 2035, with a path that includes forecast years such as 2026 at $3.22b and 2029 at $4.98b. All of these figures are in $ and are discounted back to today using Simply Wall St’s assumptions about risk and required return.

When you add up those discounted cash flows, the model arrives at an estimated intrinsic value of about $126.67 per share. Compared with the recent share price of $71.11, this implies the stock screens as around 43.9% undervalued on this DCF view.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Delta Air Lines is undervalued by 43.9%. Track this in your watchlist or portfolio, or discover 53 more high quality undervalued stocks.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Delta Air Lines.

Approach 2: Delta Air Lines Price vs Earnings

For a company that is generating earnings, the P/E ratio is a straightforward way to see what investors are currently paying for each dollar of profit. It ties the share price directly to the bottom line, which makes it a useful cross check alongside a DCF model.

The “right” P/E for any business depends on what the market expects for its future earnings growth and how risky those earnings are perceived to be. Higher expected growth or lower perceived risk can justify a higher P/E, while slower growth or higher risk usually lines up with a lower multiple.

Delta’s current P/E is 9.23x. That sits slightly below the Airlines industry average of 9.96x and well below the broader peer group average of 41.32x. Simply Wall St’s Fair Ratio, which is its estimate of an appropriate P/E given factors like Delta’s earnings growth profile, profit margins, industry, market cap and company specific risks, comes out at 15.94x. This Fair Ratio can be more informative than a simple industry or peer comparison because it adjusts for those company specific drivers instead of assuming all airlines deserve the same multiple. With the current P/E of 9.23x sitting below the Fair Ratio of 15.94x, Delta appears undervalued on this metric.

Result: UNDERVALUED

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Upgrade Your Decision Making: Choose your Delta Air Lines Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives. These are simply your story about a company, tied directly to your own assumptions for future revenue, earnings, margins and fair value.

On Simply Wall St’s Community page, Narratives let you connect Delta’s business story to a financial forecast and then to a fair value. You can then compare that fair value with the current share price and decide for yourself whether the gap between the two is large enough to act on.

Because Narratives update as fresh information comes in, such as news or earnings, you are not locked into a static view. Your Delta thesis can evolve as conditions change without you rebuilding your model from scratch.

For example, one Narrative on Delta currently points to a fair value of about US$49 per share, while another points to roughly US$81 per share. This shows how different investors can look at the same company, plug in different assumptions and arrive at very different conclusions about whether the current price looks high, low or about right.

For Delta Air Lines, we will make it straightforward by providing previews of two leading Delta Air Lines narratives:

🐂 Delta Air Lines Bull Case

Fair value in this narrative: US$81.29 per share

Implied discount versus the recent US$71.11 share price: about 12.5% undervalued

Revenue growth assumption: 4.75% a year

• Analysts in this narrative see premium, loyalty and international revenue as important supports for Delta’s earnings power, along with a focus on customer service and reliability.
• They incorporate modest revenue growth and slightly lower profit margins over the next few years, and assume the P/E multiple edges higher on those earnings.
• The fair value view also highlights risks such as softer demand, corporate travel pressure, tariffs on aircraft and competition from low cost carriers.

🐻 Delta Air Lines Bear Case

Fair value in this narrative: US$63.21 per share

Implied premium versus the recent US$71.11 share price: about 12.5% overvalued

Revenue growth assumption: 3.5% a year

• This narrative acknowledges Delta’s strong unit economics and profitability but argues that much of that strength is already reflected in the share price.
• It applies more cautious assumptions for revenue growth and future P/E, citing softer travel demand and less visibility for the year ahead.
• The author also notes thin margins, a stretched balance sheet and tariff-related economic risks as reasons to be careful about how much you pay for the stock.

Do you think there's more to the story for Delta Air Lines? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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