Delta Air Lines

Methodology

Delta's airline business exhibits extreme earnings volatility from fuel prices, demand cycles, and external shocks, making normalized earnings essential for fair value. The company can swing from record profits to massive losses within years as COVID demonstrated. Fair value calculations require mid-cycle assumptions for load factors, yields, and fuel costs rather than current conditions.

Methodology

Delta's PEG ratio fluctuates wildly and provides little valuation insight given airline industry cyclicality and capital intensity. The stock typically trades on enterprise value to EBITDAR multiples rather than earnings-based metrics. PEG becomes almost meaningless when earnings swing from billions in profits to losses depending on economic and travel demand conditions.

Methodology

Delta reinstated dividends post-COVID yielding 1-2%, though dividend sustainability remains uncertain given industry volatility and debt levels. The company prioritizes fleet modernization and debt reduction over consistent shareholder returns. Total return depends primarily on operating leverage during demand upswings rather than reliable income streams that characterize true PEGY candidates.