There are some good days to report bad earrings when the overall markets are bullish and investors are looking for bargains. Then there are bad days to report bad earnings, such as Wednesday, with the worse-than-expected Consumer Price Index report, and investors are in selling mode.
That happens to be the case with Delta Airlines Inc. (NYSE:DAL), which is the PreMarket Prep Stock Of The Day.
Triple Top And Potential Triple Bottom: Delta peaked on May 31 at $42.45 after topping out at $42.23 the day prior. The day after, June 1, the triple top was put in place when it peaked at $42.30, then cratered to finish that day at $39.54. The low for the retreat was made on June 30 at $28.10 and put in a double bottom two days later when reached $28.14 and rebounded to close at $29.92.
Pre-Earning Rally: There was either some short-covering or investors nibbling on the long side over the five days ahead of the report. As a result, in a red tape on Tuesday, the issue posted its high ($31.54) and closing high ($31.09) for the rebound. The net result was a gain for the session of $1.80 or 6.1 percent as opposed to the S&P 500 index which declined just under 1%.
Mixed Q2 Report: Before the opening, the company reported quarterly earnings of $1.44 per share which missed the analyst consensus estimate of $1.64. This is a 234.58% increase over losses of $(1.07) per share from the same period last year.
However, the company reported quarterly sales of $13.82B which beat the analyst consensus estimate of $13.40B. This is a 93.99% increase over sales of $7.13 billion in the same period last year.
PreMarket Prep Take: When the issue was being covered on the show, it was already in the red by more than $1 at the $30 area.
Co-host Dennis Dick commented on the good part of the report: “At least they're making some more money with the sales beat.” Regarding the firm's fundamentals, Dick posed the question for the longer term: “With the higher prices, will demand destruction take place?”
The author of this article focused on the technicals of the issue from a daily/monthly perspective. Investors were altered that the issue had major support in the lower $28 handle that took place at the turn of the month. In other words, if that low can hold, the issue will have a double bottom on the monthly as well as the daily time frame.
DAL Price Action: After a lower open, $28.95 vs. $31.09, the issue continued its move lower. However, on the ensuing decline, the issue found buyers ahead of the aforementioned support, only reaching $28.35, and reversed course.
As of 12:15 p.m. EST, the issue has been grinding higher and is attempting to remain in the $29 handle.
The full discussion on the issue from Wednesday’s show can be found here:
Photo: Delta Airlines
