Delta Air Lines had a strong start to 2026, with positive trends defying the broader airline industry. Despite slower year-over-year revenue growth and earnings per share, the stock remains undervalued. Delta’s fourth-quarter revenue rose by 1.2%, with a decline in non-GAAP earnings. Management is optimistic about Q1, expecting revenue to rise by 5-7% and non-GAAP earnings per share to grow by 52%.

Delta’s premium positioning has been a key driver of its financial success, with sales of premium products remaining resilient. The company generated $10 billion in free cash flow over the past three years, strengthening its balance sheet and reducing leverage. Management is optimistic about the first few weeks of 2026, expecting significant revenue and earnings growth for the year.

Despite the stock’s cheap valuation and strong financial performance, investors should consider the cyclical and capital-intensive nature of the airline industry. Delta has managed its debt well with significant free cash flow generation. While the stock looks attractive, it remains high-risk, and investors should keep positions small. Delta’s sales growth may accelerate throughout 2026, presenting an opportunity for investors with a high risk tolerance.

Read more at Yahoo Finance: Delta Says It Has Started 2026 “Great Momentum” — Time to Buy the Stock?