Lubin Investment · Blog

Delta (DAL): Q2 2026 results, my verdict

2026-07-10 ·

DAL: see the full analysis on Lubin Investment

Delta posted record revenue of 19.76 billion dollars, up 19% year over year, and earnings per share above expectations. But net income fell 25% due to a historic fuel bill. The stock, which has pulled back since my pre earnings analysis, now trades below my reasonable buy price. Here is what that changes.

What Delta announced today

Delta posted adjusted earnings per share of 1.56 dollars, above the 1.47 dollars analysts expected, and record revenue of 19.76 billion dollars, up 19% year over year. But GAAP net income fell 25% year over year to 1.6 billion dollars: the average fuel price jumped 75% year over year to 3.93 dollars a gallon, the highest quarterly fuel bill in the company's history. Notably, for the first time, premium seat revenue, 6.92 billion dollars, exceeded main cabin revenue, 6.85 billion. Delta also raised its dividend by 15% starting the September quarter, and reaffirmed its full year targets: adjusted earnings per share between 6.50 and 7.50 dollars, free cash flow between 3 and 4 billion dollars.

What this changes for the quality of the file

My filter keeps Delta at 8 out of 10: the file remains solid, but its 6.9% net margin and 6.1% cash margin stay structurally thinner than a software company's, normal for an airline that owns planes, staff, and infrastructure. Its return on invested capital comes in at 10.4%, modest next to tech names but in line with the airline sector. Net debt equals 2.3 years of free cash flow, higher than a software company but consistent with a fleet of aircraft to finance.

The price moved, and not in the direction you might expect

Since my pre earnings analysis published on July 4, the stock has pulled back: it now trades at 14.3 times its free cash flow, down from 15.2 times a few days earlier. My model computes a reasonable buy price of 105.62 dollars, against a current price of 87.39 dollars, a 20.9% discount: the stock has dropped back below my buy threshold, whereas it sat just above it before the announcement.

The real story: fuel, not demand

This quarter tells two different stories. On demand, everything looks fine: record revenue, and more importantly a structural shift where premium passengers now bring in more than economy class, a sign the upscale strategy is working. On costs, the quarter was hit by a factor largely outside Delta's control: the price of fuel, which depends on the global oil market, not on the airline's execution. That is an important nuance: a drop in net income caused by fuel is not the same warning sign as one caused by losing customers or poor management.

How I decide

The results confirm what I thought before the announcement: Delta remains a decent quality business in a historically tough sector, with a real differentiator, the SkyMiles loyalty program and American Express partnership, plus the ongoing premium upgrade. The stock's decline since the announcement, driven by a macro factor rather than a fundamental problem, pushes it back below my reasonable buy price. That is not a euphoria signal, just a file that becomes statistically interesting again after a costly fuel quarter. You can check <a href="/analyse/DAL">the full page on Delta</a>, compare with <a href="/blog/delta-air-lines-dal-analyse-fondamentale">my pre earnings analysis</a>, or explore <a href="/screener">my screener</a> for other airline sector files.

FAQ

Why did Delta's net income fall despite record revenue?

Because of a historic fuel bill: the average fuel price jumped 75% year over year, the sharpest quarterly rise the company has seen. This is a cost issue, not a demand issue.

What does the shift toward premium seats mean?

That Delta now earns more from its priciest seats than from economy class, for the first time in its history. It is a sign that its upscale strategy is working.

Did the stock get cheaper after the results?

Yes: the price pulled back, taking the valuation from 15.2 to 14.3 times free cash flow, and pushing the stock below my reasonable buy price of 105.62 dollars.

Should you buy Delta now?

The file remains decent quality, 8 out of 10, and trades below my target price after this quarter. This is not investment advice: do your own research before deciding.

DAL: see the full analysis on Lubin Investment

About the author

Written by Lubin Danilo, founder of Lubin Investment. A self-taught individual investor, I find fundamental analysis fascinating, and it has delivered excellent results. For three years now, my performance has beaten the S&P 500. But analyzing every stock took too much time: sites with incomplete data, calculation methods and criteria never aligned with mine. And spotting the best stocks was just as time-consuming, even with my own well-defined checklist. So I put my software development background to work to build this software, base my investment strategy on its results, and share it with people who share the same passion as me. It judges a company's quality and its price separately, using criteria drawn from the financial literature (Warren Buffett, Michael Mauboussin, Aswath Damodaran).