Is Delta Air Lines (DAL) Poised to Beat Earnings Estimates?

Delta Air Lines, Inc. (DAL) is set to release third-quarter fiscal 2014 results before the opening bell on Oct 16, 2014.

In the last quarter, the company delivered a positive 5.79% earnings surprise. Let’s see how things are shaping up for this announcement.

Factors at Play this Quarter

Falling oil prices, coupled with a 2% rise in consolidated passenger revenue per available seat mile in Sep 2014 will boost Delta Air Lines’ top-line growth significantly in the upcoming quarter. Moreover, in the same month, domestic and overseas traffic increased 5.7% and 5.2%, respectively.

However, rising concerns related to the outbreak of the Ebola virus across Africa coupled with lower passenger count over the last few months may act as headwinds for the company in the forthcoming quarter.

Earnings Whispers

Our proven model does not conclusively show that Delta Air Lines is likely to beat the Zacks Consensus Estimate this quarter. This is because a stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy) or at least 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, this is not the case here as elaborated below..

Zacks ESP: The Most Accurate estimate and the Zacks Consensus Estimate are poised at $1.18. Hence, the ESP is 0.00%.

Zacks Rank: Delta Air Lines carries a Zacks Rank #3 (Hold). While this increases the predictive power, we need to have a positive ESP to be confident about an earnings surprise.

We caution against stocks with Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are some companies you may want to consider as our model shows these have the right combination of elements to post an earnings beat this quarter.

United Continental Holdings, Inc. (UAL) with an Earnings ESP of +1.49% and a Zacks Rank #1.

Alaska Air Group, Inc. (ALK) with an Earnings ESP of +1.46% and a Zacks Rank #2.

Southwest Airlines Co. (LUV) with an Earnings ESP of +1.92% and a Zacks Rank #2.