Financial Analysis: Delta Air Lines (DAL) vs. Virgin America (NASDAQ:VA)

Delta Air Lines (NYSE: DAL) and Virgin America (NASDAQ:VA) are both transportation companies, but which is the better stock? We will contrast the two companies based on the strength of their analyst recommendations, institutional ownership, earnings, valuation, profitability, risk and dividends.

Insider and Institutional Ownership

87.6% of Delta Air Lines shares are owned by institutional investors. Comparatively, 65.6% of Virgin America shares are owned by institutional investors. 0.4% of Delta Air Lines shares are owned by insiders. Comparatively, 31.2% of Virgin America shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Risk & Volatility

Delta Air Lines has a beta of 1.24, meaning that its stock price is 24% more volatile than the S&P 500. Comparatively, Virgin America has a beta of 1.56, meaning that its stock price is 56% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent recommendations for Delta Air Lines and Virgin America, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Delta Air Lines 0 0 15 0 3.00
Virgin America 1 1 0 0 1.50

Delta Air Lines currently has a consensus target price of $64.62, suggesting a potential upside of 26.87%. Virgin America has a consensus target price of $57.00, suggesting a potential upside of 0.04%. Given Delta Air Lines’ stronger consensus rating and higher possible upside, equities analysts clearly believe Delta Air Lines is more favorable than Virgin America.

Earnings & Valuation

This table compares Delta Air Lines and Virgin America’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Delta Air Lines $40.46 billion 0.90 $7.45 billion $4.98 10.23
Virgin America N/A N/A N/A $7.13 7.99

Delta Air Lines has higher revenue and earnings than Virgin America. Virgin America is trading at a lower price-to-earnings ratio than Delta Air Lines, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Delta Air Lines and Virgin America’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Delta Air Lines 8.97% 26.50% 6.77%
Virgin America 11.64% 22.78% 10.96%

Dividends

Delta Air Lines pays an annual dividend of $1.22 per share and has a dividend yield of 2.4%. Virgin America does not pay a dividend. Delta Air Lines pays out 24.5% of its earnings in the form of a dividend. Virgin America has raised its dividend for 3 consecutive years.

About Delta Air Lines

Delta Air Lines, Inc. provides scheduled air transportation for passengers and cargo throughout the United States and across the world. The Company’s segments include Airline and Refinery. The Company’s route network is centered around a system of hub, international gateway and airports that the Company operates in Amsterdam, Atlanta, Boston, Detroit, London-Heathrow, Los Angeles, Minneapolis-St. Paul, New York-LaGuardia, New York- John F Kennedy International Airport, Paris-Charles de Gaulle, Salt Lake City, Seattle and Tokyo-Narita. Each of these operations includes flights that gather and distribute traffic from markets in the geographic region surrounding the hub or gateway to domestic and international cities and to other hubs or gateways. The Company’s route network includes its international joint ventures, its alliances with other foreign airlines, its membership in SkyTeam and agreements with multiple domestic regional carriers that operate as Delta Connection.

About Virgin America

Virgin America Inc. is an airline that provides scheduled air travel in the United States and Mexico. The Company operates in air transportation service segment. The Company operates from Los Angeles and San Francisco with a presence at Dallas Love Field (DAL) to other destinations in North America. The Company provides service to over 20 airports in the United States and Mexico with a fleet of over 60 narrow-body aircraft. It offers three levels of service: First Class, Main Cabin Select and Main Cabin. The Company’s First Class level of service includes eight-seat cabin with an inflight teammate to provide service. Its Main Cabin Select includes approximately 40 inches of pitch for leg room. The Company’s Main Cabin includes approximately 30 inches of pitch and individual Red inflight entertainment system at every seatback. The Company maintains a guest loyalty program called the Elevate frequent flyer program.

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