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Air Transport Industry provides transportation through flight for freight or passengers. The industry is a highly dynamic and competitive environment. According to the European Commission Report of 2017 global air traffic in 2016 surpassed 3.7 billion with profitability margins of 8.8% (European Commission, 2).
Delta Airlines is leading passenger and cargo transporter across the world. It exceeds 13,000 flights every day visiting more than 300 destinations in 59 countries (Neugarten, 1). Delta Airlines Current P/E ratio stands at 11.10 with a stock price of $53.17 (Macrotrends, 2).
Delta Airlines faces stiff competition from United Continental Holdings Inc, American Airlines Group Inc, and Southwest Airlines Co. As of 16th October 2019, United Continental had a P/E ratio of 9.09 stock price of $89.70. As of 16th October, 2019 Southwest Airlines had a P/E ratio of 12.42 with the stock price of $53.67.
The air transport industry is dynamic and competitive. Players in the market compete through service delivery, comfort, efficiency, and technology. In 2019, the combined P/E ratios of 18 major players in the industry stand at 7.05 with the aggregate market capitalization per Net income of all companies standing at 23.74.
As of the financial year of 2018, Delta Airlines had a market capitalization of $35.3 billion with an adjusted operating revenue of $11.6 billion. This makes the company most profitable in the industry. Looking at the P/E ratio, Delta Airlines has the highest (11.10) compared the main competitor (United Airlines= 9.09) and industry P/E ratio standing at 7.05. I believe that my choice of stock is fairly priced compared with competitors. With a stock price of $53.17, it is lower than that of United Continental Airlines, which stands at 89.70. Importantly, given the profitability of the company stock price is fair and competitive.
European Commision. Annual Analyses of the EU Air Transport Market 2016. Eurpean Commision Report. March, 2017. Accessed from <https://ec.europa.eu/transport/sites/transport/files/2016_eu_air_transport_industry_analyses_report.pdf>
Neugarten, Jesse. Who are Delta Airlines Main Competitors? DAL. Investopedia. 25th June, 2019. Accessed from< https://www.investopedia.com/articles/markets/093015/who-are-delta-airlines-main-competitors.asp>
Macrotrends. Delta Air Lines PE Ratio 2006-2019 | DAL. Macrotrends. October 2019. Accessed from https://www.macrotrends.net/stocks/charts/DAL/delta-air-lines/pe-ratio
Macrotrends. United Airlines Holdings Inc PE Ratio 2006-2019 | UAL. Macrotrends. October, 2019. Accessed from <https://www.macrotrends.net/stocks/charts/UAL/united-airlines-holdings-inc/pe-ratio>
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