Delta Rally Pauses After Slight Q2 Miss

Delta Air Lines, Inc. DAL shares, which were flying high in record territory ahead of the release of its second-quarter results, were grounded, as the company reported an earnings miss.

The 2Q Results That Stalled The Record Run

Delta announced Thursday second-quarter earnings per share of $1.68, down from $2.03 in the year-ago period. Adjusted earnings came in at $1.64 per share.

Analysts, on average, estimate earnings per share of $1.65 per share.

Operating revenues rose to $10.79 billion from the year-ago's $10.45 billion.

Among other key metrics, passenger unit revenues were up 2.5 percent, with capacity increasing 0.4 percent. The quarter marked Delta's return to unit revenue growth for the first time in 2.5 years.

Looking forward, the company guided to passenger unit revenue growth of 2.5–4.5 percent in the third quarter.

Record Run

After a consolidation seen early this year, Delta shares moved below the range in early March, touching a closing low of $43.85 on April 13, a day after it released forecast-beating second quarter results.

However, since then, there was no looking back, as the stock rallied unfettered and hit an all-time closing high of $55.48 on July 12.

DAL Source: Y Charts

Given that the stock was oversold amid its record run, it would have taken a blow-out quarterly performance for it to take a further leg up. However, it was not to be, with the earnings coming in shy of expectations.

The disappointment has set in motion a selling wave, which has dragged the stock by over 2 percent intra-day.

Fundamentally, Technically Supported

The sell-off may not take the stock far, as it is finding support in near a familiar area, with the intra-day low of the day being $53.82 hit around 10:05 a.m. ET. Incidentally, the stock has found support around the $53.68–$53.89 area in five consecutive sessions between July 29 and July 6.

This level being a major level to hold, the stock is unlikely to break below it. On the upside, the stock has made highs in the $55.50 to $55.75 range on three occasions (July 7, July 10 and July 12), with its intra-day high at $55.75 reached on July 10.

DAL Source: Y Charts

At the time of writing, Delta was sliding 1.93 percent to $54.41.

Joel Elconin contributed to this article. Related Links:

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