DAL 45.66 (-0.78%)
US2473617023TransportationAirlines

Last update on 2024-06-07

Delta Air Lines (DAL) - Piotroski F-Score Analysis for Year 2023 (Final Score: 7/9)

Uncover Delta Air Lines (DAL) Piotroski F-Score 2023 Analysis revealing a score of 7/9. A comprehensive insight into financial health and stock potential.

Knowledge hint:
The Piotroski F-Score is a number between 0 to 9 which reflects the strength of a company's financial position. It is based on 9 criteria involving profitability, liquidity, and leverage. This model helps investors identify stocks that are strong, undervalued investments.
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Short Analysis - Piotroski Score: 7

We're running Delta Air Lines (DAL) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

Criteria
Company has a positive net income?
1
Company has a positive cash flow?
1
Return on Assets (ROA) are growing?
1
Operating Cashflow are higher than Netincome?
1
Leverage is declining?
1
Current Ratio is growing?
0
Number of shares not diluted?
0
Cross Margin is growing?
1
Asset Turnover Ratio is growing?
1

The Piotroski F-Score is a number between 0 and 9 reflecting a company's financial strength based on 9 criteria regarding profitability, liquidity, and operational efficiency. Delta Air Lines (DAL) scored 7 out of 9 on the Piotroski F-Score, indicating a strong financial position. Key positive indicators include positive net income, growing return on assets (ROA), higher operating cash flow than net income, declining leverage, and growing gross margin and asset turnover. However, concerns arise due to a declining current ratio and an increase in shares outstanding, which affect liquidity and potential share value.

Insights for Value Investors Seeking Stable Income

Based on the Piotroski F-Score analysis, Delta Air Lines (DAL) presents as a relatively strong investment opportunity, scoring 7 out of 9. The company shows positive signs in profitability and operational efficiency, which are strong indicators of a worthwhile investment. However, potential investors should be cautious about its declining liquidity and slight increase in outstanding shares. Thus, it is recommended to keep an eye on these areas while considering other factors and further research before investing.

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Profitability of Delta Air Lines (DAL)

Company has a positive net income?

Net income is a critical indicator of a company's profitability and is used to assess the overall financial health of a business over a specific period.

Historical Net Income of Delta Air Lines (DAL)

Delta Air Lines (DAL) has reported a net income of $4.609 billion in 2023, which is a positive figure. This marks a significant rebound for the company, especially when compared to the challenging fiscal periods over the last 20 years, such as 2020 when it faced a net loss of $12.385 billion. Given the criteria for Piotroski analysis, Delta earns 1 point for a positive net income. The positive trend indicates that the company has been able to effectively manage its costs and increase its revenue back to pre-pandemic levels, signaling healthier financial status and overall business recovery.

Company has a positive cash flow?

The Cash Flow from Operations (CFO) figure is essential as it indicates how well a company can generate cash from its core business operations.

Historical Operating Cash Flow of Delta Air Lines (DAL)

For 2023, Delta Air Lines (DAL) reports a positive Cash Flow from Operations (CFO) of $6,464 million.

Return on Assets (ROA) are growing?

Comparing the Return on Assets (ROA) of Delta Air Lines from 2022 and 2023.

Historical change in Return on Assets (ROA) of Delta Air Lines (DAL)

The ROA for Delta Air Lines has increased from 0.0182 in 2022 to 0.0632 in 2023. This significant improvement in ROA indicates better utilization of the company's assets in generating earnings, reflecting management's effective control over its asset base. This increase adds 1 point in the Piotroski score, which is a positive sign for potential investors.

Operating Cashflow are higher than Netincome?

This criterion compares the operating cash flow to net income. Operating cash flow higher than net income indicates high earnings quality, as it shows that the company generates sufficient cash to cover its net earnings.

Historical accruals of Delta Air Lines (DAL)

In 2023, Delta Air Lines (DAL) reported an operating cash flow of $6.464 billion compared to a net income of $4.609 billion. The operating cash flow is indeed higher, which is an excellent indicator of earnings quality. This suggests that the company is not relying on non-cash accounting manipulations to show profitability, a very positive sign for investors. Historical data indicates fluctuations in both metrics, but the positive gap in 2023 reinforces the company's financial health. Therefore, we add 1 point.

Liquidity of Delta Air Lines (DAL)

Leverage is declining?

Change in Leverage measures the change in financial leverage over a period. Lower leverage indicates lower financial risk.

Historical leverage of Delta Air Lines (DAL)

Leverage has decreased in 2023 compared to 2022, declining from 0.3809 to 0.3196. This represents a positive trend and adds 1 point. Its leverage is now consistently under its 20-year average, which was noticeably fluctuating before stabilizing post-2010 with occasional spikes.

Current Ratio is growing?

Current Ratio measures a company's ability to meet its short-term obligations with its short-term assets. It is crucial as it provides insight into the liquidity and financial health of a company.

Historical Current Ratio of Delta Air Lines (DAL)

The Current Ratio of Delta Air Lines (DAL) has decreased from 0.5016 in 2022 to 0.3887 in 2023, indicating a decline in its ability to settle short-term liabilities. This trend is concerning as it shows a weakening liquidity position. Over the past 20 years, the company's Current Ratio has fluctuated, often staying below the industry median. For instance, in 2023, the industry's median Current Ratio was 0.8112 compared to DAL's 0.3887. This persistent liquidity gap suggests that DAL has consistently struggled more than its peers to cover short-term obligations, which could be a red flag for investors. Given the decreasing trend in 2023, Delta Air Lines receives 0 points for this criterion.

Number of shares not diluted?

Decrease in shares outstanding indicates a company's efforts to buy back shares, which can suggest confidence in future performance.

Historical outstanding shares of Delta Air Lines (DAL)

For Delta Air Lines (DAL), the shares outstanding have increased from 638 million in 2022 to 639 million in 2023. This represents an increase of 1 million shares. In the Piotroski score, a decrease in outstanding shares should earn a point because it often reflects a firm's buyback activity signaling strong confidence from management. However, in this case, since there is an increase in shares outstanding, Delta Air Lines doesn't earn a point for this criterion. Historically, Delta Air Lines has had fluctuating outstanding shares, with significant increases between 2008 and 2010, peaking at 858 million in 2013 before gradually decreasing and holding relatively steady around 636-639 million in recent years.

Operating of Delta Air Lines (DAL)

Cross Margin is growing?

The first criterion is evaluating the change in Gross Margin, which measures the percentage of revenue that exceeds the cost of goods sold (COGS). This is crucial because an increasing Gross Margin suggests improved efficiency in controlling production costs relative to revenue, enhancing profitability.

Historical gross margin of Delta Air Lines (DAL)

For Delta Air Lines (DAL), the Gross Margin increased from 0.1545 in 2022 to 0.1977 in 2023. This positive trend adds 1 point to the Piotroski Analysis. A higher Gross Margin indicates better cost management and pricing power. Over the last 20 years, Delta's Gross Margin has shown volatility due to fluctuating fuel prices and economic cycles, but the 2023 value surpasses the 2022 figure and aligns closely with the industry median of 0.198. This uptick suggests an operational improvement, reinforcing investor confidence in Delta's cost structure and profitability trajectory.

Asset Turnover Ratio is growing?

Asset turnover measures a company's efficiency at using its assets to generate sales or revenue. A higher ratio indicates better performance.

Historical asset turnover ratio of Delta Air Lines (DAL)

The Asset Turnover ratio for Delta Air Lines improved from 0.6989 in 2022 to 0.7955 in 2023, reflecting enhanced efficiency in using its assets to generate revenue. This marks an increase of around 13.8%, which is indicative of better asset utilization. Historically, this ratio has shown significant variability, hitting a low of 0.2504 in 2020 due to the pandemic. Given the data from the past 20 years, this positive trend is favorable and adds 1 point in the Piotroski score, suggesting improved operational efficiency.


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