Jim Cramer Talks Delta Stock

by CNBC Jim Cramer shared his assessment on Delta Air Lines stock, reporting that lost revenue on Thursday. He said investors should understand that there is a difference between Delta as a stock and Delta as a company.

“Over the years, we’ve convinced ourselves that the airline industry has pricing discipline, but traditionally that hasn’t been the case, and now there’s a skunk at the garden party,” he said. “Delta is a great company. Delta’s stock is only as good as its weakest competitors, because they’re in a race to the bottom, and that’s killing it.”

While the US carrier posted record revenue in Q2, the numbers were still below expectations, coming in at $15.41 billion versus the $15.45 billion consensus estimate from LSEG. Management reported strong summer travel demand, with CEO Ed Bastian saying on the earnings call that TSA travel volumes were up 7% year-over-year.

But Bastian also said “seat growth in the domestic industry has accelerated in the summer months, impacting main-cabin performance,” which Cramer said indicates the Atlanta-based airline has more seats than it can fill.

Delta’s stock price was down nearly 4% by Thursday’s close, Cramer noted, noting that the stock hasn’t appreciated significantly over the past decade.

The airline is most profitable industry, and its dismal quarter doesn’t bode well for its competitors. While Cramer acknowledged that Delta is the best performer among them, he stressed that investors should consider a stock’s entire industry before buying any one stock.

“If you’re going to buy a stock, any stock, first look at how it performs over time. Second, look at how its group performs,” he said. “You can look at a packed plane and want to buy Delta Air Lines, or you can look at a pathetic chart and know for sure that the stock, sadly, is simply not worth owning.”

Delta did not immediately respond to a request for comment.