The reports from Delta Airlines (DAL.US)an airline, and Fastenal (FAST.US)which operates in the logistics, manufacturing and supply chain industries, opened earnings season on Wall Street.
Delta Airlines (DAL.US)
The airline’s shares rose after second-quarter revenue and earnings forecasts beat expectations. Sentiment was also supported by management’s comments, which highlighted strong demand for commuter travel despite concerns about weakness in other sectors. In the first quarter, the company’s sales and profits came in below forecasts and costs rose nearly 5%, partly due to storms that caused a grounding in the first quarter. The company said domestic sales in March accounted for 85% of 2019 sales.
Revenues: $11.84 billion versus $11.99 billion forecast
Adjusted earnings per share: $0.25 vs. $0.30 forecast
The airline industry tends to be busier during the tourist spring and summer months, so investors are ultimately positive about the company’s report. The airline intends to increase its operational capacity and reported record bookings for the summer. In the first quarter of 2023, the company reported a loss, mainly due to 34% higher 4-year pilot contracts.
The company estimates second-quarter revenue will grow 15% to 17% year-on-year with adjusted operating margins up to 16% and adjusted earnings per share of $2.00 to $2.25. Refinitiv analysts forecast revenue growth of 14.7% year over year and earnings per share nearly 20% lower than the company’s forecasts.
Another positive impetus for the company is the high demand for premium services and the partnership with the US payments giant American Express, which the company claims brought additional booking demand and revenues of almost $1.8 billion in the first quarter.
Delta Airlines (AIR.US) in the D1 chart. Pre-market readings are pointing to the $35 area where the bulls, after clearing the SMA200, will need to confirm their momentum by breaking above the SMA100. The key will likely be the reaction to the upside gap. Source: xStation5 by XTB
Fastenal (FAST.US)
In addition to providing supply chain and inventory management services, the company also distributes metal components such as bolts, nuts, bars and fasteners used in the construction industry, so its performance can provide some insight into the health of the global economy. Despite a relatively positive report for Q1 2023, the stock loses almost 3% ahead of the open.
Revenues: $1.86 billion vs. $1.861 billion forecast ($1.704 billion in Q1 2022, up more than 10% year-on-year)
Earnings per share (EPS): $0.51 vs. $0.49 forecast
A better report, helped by stronger manufacturing demand, wasn’t enough to improve sentiment. Revenue fell slightly short of expectations. Investors remain cautious and expect that the company’s earnings could be hurt by a slowdown in future quarters as interest rate hikes tend to have a lagged impact on the economy. Slowing construction activity, deteriorating financing conditions and weaker consumers in a high-yield environment could significantly impact the company’s future performance.
Fastenal (FAST.US) in the D1 chart. The stock price has still not climbed above pre-pandemic levels, but the long-term uptrend line from 2020 has remained intact. Furthermore, the price has ended the short-term downtrend. The key spot appears to be the $50 level, where the SMA100 and SMA200 are currently trending. Source: xStation5 by XTB
Disclosure according to § 80 WpHG for the purpose of possible conflicts of interest
The author may be invested in the securities or underlyings discussed.
The authors of the publications compile that information at their own risk. Analysis and opinions are not written with reference to the specific investment objectives and needs of any person. XTB publications commenting on specific situations in the financial markets and general statements made by XTB employees regarding the financial markets, do not constitute and should not be construed as advice to the customer by XTB. XTB is not liable for any loss arising directly or indirectly from decisions made regarding the content of the publications.
Risk Notice
CFDs are complex instruments and come with a high risk of losing money quickly because of leverage. 80% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Investment success and profits from the past do not guarantee success in the future. XTB content, newsletters and communications do not constitute investment advice promotional message to understand.
