Investing

Earnings Previews: Delta Air Lines, PepsiCo, Rite Aid and More

The first big week of the new earnings season continues with several big companies reporting earnings before Thursday’s opening bell.

The first three of the country’s largest banks reported quarterly results Wednesday morning, and two more, plus the world’s largest asset manager, report on Thursday. A major airline, a Dow 30 component, a specialty retailer and more are scheduled to report Thursday morning.

Delta Air Lines

Last year was dismal for U.S. air carriers. Delta Air Lines Co. (NYSE: DAL) saw its shares fall by nearly 31% in 2021, though its losses were the smallest of any legacy carrier. That’s the context for the company’s one-year share price gain of nearly 95% and the year-to-date gain of about 41% — been down so low, everything looks like up. While air traffic is up by a factor of 10 year over year, it remains roughly half the size of 2019 traffic. Industry analysts expect Delta to continue posting daily cash burns of $12 million to $14 million for at least another quarter.

Of 18 analyst ratings, all are Buy or Strong Buy. The consensus price target on Delta stock is $52.76, implying a potential upside of around 11%, based on a recent price of around $47.50 per share. At the high target of $72, the implied upside is nearly 52%.

Analysts expect Delta to post a first-quarter loss per share of $2.91 on revenue of $3.98 billion. In the first quarter of last year, Delta posted a net loss per share of $0.51 on $8.59 billion in revenue.

The stock trades at a multiple of 12.6 times estimated 2022 EPS and 7.8 times estimated 2023 earnings. The stock’s 52-week range is $17.51 to $52.28. Delta has suspended its dividend.

United Healthcare

UnitedHealth Group Inc. (NYSE: UNH) is the nation’s largest health insurer and one of 30 stocks included in the Dow Jones industrial average. The stock has gained about 45% in the past 12 months, even though growth since the beginning of the year has been a rather modest 8%. The interesting thing about United Healthcare is that revenue has risen steadily over the past half-dozen years, and so has net income. The stock may be fully valued at its current price, but that doesn’t mean growth has evaporated.

Of 22 analyst ratings, all are Buy or Strong Buy. The consensus price target on United Healthcare stock is $403.83, implying a potential upside of around 7.2%, based on a recent price of around $376.60 per share. At the high target of $462, the implied upside is more than 14%.

Analysts expect the company to post first-quarter earnings per share (EPS) of $4.36 on revenue of $69.27 billion. In the first quarter of last year, United Healthcare posted $3.72 in EPS and revenue of $64.42 billion.

The stock trades at a multiple of 20.7 times expected 2021 EPS, 17.8 times estimated 2022 EPS and 15.7 times estimated 2023 earnings. The stock’s 52-week range is $267.00 to $380.50, and the company pays an annual dividend of $5.00 (yield of 1.33%).