Delta Air Lines Inc (DAL)

Conclusion

Delta Air Lines operates scheduled passenger and cargo air transportation in the United States and internationally, centred on hubs in Atlanta, Detroit, Minneapolis-St. Paul and Salt Lake City, and also runs a Refinery segment. On 2026-11-09 the share price was 91.80 USD, giving a market capitalisation of 60.4 billion USD and an enterprise value of 75.4 billion USD.

The verdict is undervalued. The fair value band runs from 127.93 to 191.90 USD with a midpoint of 159.92 USD, a margin of safety of 74.2% at the current price. The discounted cash flow gives 231.48 USD per share at a discount rate of 11.98%, and the fair value from historical multiples is 88.35 USD. Against their own ten-year medians, the price-to-earnings ratio stands at 18.36 versus 9.33, a premium of 96.7%, while the price-to-free-cash-flow ratio is 10.63 versus 16.87, a discount of 37.0%. The reverse DCF implies growth of 2.25%, a "vs" value of -27.7% against the five-year revenue growth of 30.0%, while the ten-year revenue growth was only 4.5%.

What holds the case up is free cash flow conversion of 172.6% on a trailing basis, interest coverage of 8.01 and three-year EPS growth of 55.0%. What would break it is the current ratio of 0.40, the Altman Z-score of 1.55 and the downward estimate revisions, with the current-year estimate down 18.4% over 90 days. Operating margin of 7.36% is also below its ten-year median of 9.62%.

Financial health

Financial strength is red, held back by a current ratio of 0.40, an Altman Z-score of 1.55 and a quick ratio of 0.24, while interest coverage of 8.01 is good. Net debt to EBITDA is 2.04 and debt to equity is 0.84, both neutral. The Altman model was designed for manufacturers, so its distress zone is a weak guide for an airline. Insolvency risk is low, with a probability of about 1.4% by the estimate of the Ohlson model over one to two years, based on figures as of 2025-12-31. The company's net debt to EBITDA and interest coverage show that the debt is serviceable, but the thin liquidity buffer is the main pressure point.

Earnings quality

Earnings quality is yellow: free cash flow conversion of 172.6% on a trailing basis is good, but the five-year average of 53.7% is weak. The accrual ratio of -4.3% is favourable, and the Beneish M-score of -3.50 is read as unlikely to indicate manipulation. The Piotroski score is 6 out of 9. Free cash flow after stock-based compensation is 5.68 billion USD, but the stock-based compensation figure itself is not available in the data. The share count has risen at 0.6% a year over five years, so there have been no net buybacks. The company beat earnings expectations in six of the last eight quarters, with an average surprise of 6.1%. Estimate revisions are sharply negative, with 20 downgrades and 2 upgrades in the last 30 days for the current year.

Profitability

Profitability is yellow. Gross margin of 29.9% is above its ten-year median of 25.9%, but operating margin of 7.36% is below its median of 9.62%, and net margin of 4.58% is below its median of 7.84%. ROIC of 10.32% sits against a WACC of 10.07%, giving a difference of 0.25%, which is neutral. The DuPont split shows a net margin of 7.9%, an asset turnover of 0.78 and an equity multiplier of 3.91. Return on equity of 14.6% therefore depends heavily on leverage rather than on operating returns alone.

Growth

Growth is green. Revenue has compounded at 7.8% over three years, 30.0% over five years and 4.5% over ten years, and it grew in 8 of the last 10 years. EPS compounded at 55.0% over three years and 3.1% over ten years. Free cash flow per share has declined at 0.5% a year over ten years, so the recent earnings expansion is not matched by long-run cash growth. The next-year EPS estimate implies growth of 34.9%, but that estimate has been cut by 17.7% over 90 days.

Valuation

Valuation is green. The price-to-earnings ratio of 18.36 is 96.7% above its ten-year median of 9.33, and enterprise value to EBITDA of 10.23 is 58.1% above its median of 6.47. Price to free cash flow of 10.63 is 37.0% below its median of 16.87, and price to sales and price to book are close to their medians. The DCF gives 231.48 USD per share at a discount rate of 11.98%. The fair value is an order of magnitude built on fixed assumptions, including a 5% equity risk premium and capped growth, and is not a price target. The reverse DCF implies growth of 2.25%. The dividend yield is 0.86% and the payout on free cash flow is 9.2%.

Risks

The weakest numbers are the current ratio of 0.40 and the quick ratio of 0.24, which leave little cash cushion against a shock to bookings or fuel costs. The Altman Z-score of 1.55 points the same way, although it does not apply cleanly to an airline. Falling estimates, with the current-year EPS estimate down 18.4% over 90 days, indicate that analysts see weaker earnings ahead. Operating margin below its ten-year median limits the company's ability to absorb higher costs. Stock-based compensation is not available, so its effect on earnings cannot be measured. This analysis has no debt maturity schedule and no revenue breakdown by segment, so refinancing risk and the contribution of each business line cannot be assessed.