Can Delta Airlines (DAL) Keep the Earnings Streak Alive?

Delta Airlines Inc. DAL is slated to report its second-quarter 2014 results on Jul 23, before the market opens. In the last quarter, the company had delivered a 13.79% positive earnings surprise. Moreover, the trailing four quarter average beat is pegged at 6.34%. Let's see how things are shaping up prior to this announcement.

Factors Influencing Results this Quarter

We remain encouraged by Delta's commitment to consistently improve operational performance, enhance customer experience and increase shareholder returns through balanced capital investments. Strong domestic market, capacity discipline, cost control measures and customer-focused initiatives are expected to boost the company's topline.

On the service front, Delta offers flat-bed seats in BusinessElite on every international destination along with on-demand entertainment across all seats, thus adding to passenger comfort and value.

Moreover, this premier passenger carrier has fortified its position in Seattle by adding several international and domestic routes, and is building the coastal city as a key part of its Pacific network restructuring. Further, the acquisition of Virgin Atlantic has strengthened Delta's trans-Atlantic operations.

Earnings Whispers?

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

Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, stands at 0.00% for Delta Airlines.

Zacks Rank: Delta Airlines carries a Zacks Rank #1 which increases the predictive power of ESP. But when combined with ESP of 0.00%, it makes surprise prediction difficult.

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

Other Stocks to Consider

Here are some other companies to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:

Allegiant Travel Group Inc. ALGT, with earnings ESP of +6.40% and a Zacks Rank #1.

Southwest Airlines Co LUV, with earnings ESP of +3.39% and a Zacks Rank #1.

Alaska Air Group Inc. ALK, with earnings ESP of +0.92% and a Zacks Rank #1.