Is Delta Air Lines, Inc. overvalued or undervalued?

As of 18 February 2025, the valuation grade for Delta Air Lines, Inc. has moved from expensive to very expensive, indicating a significant shift in its market perception. The company appears to be overvalued based on its current metrics, with a P/E ratio of 9, a Price to Book Value of 2.19, and an EV to EBITDA ratio of 5.50. In comparison, its peer Southwest Airlines Co. has a much higher P/E ratio of 36.05, suggesting that Delta's valuation does not align favorably with its industry peers.
Given these ratios and the recent performance, Delta Air Lines is positioned as overvalued. The company's return metrics also highlight a concerning trend, with a year-to-date decline of 20.25% compared to a 2.44% gain in the S&P 500. This underperformance, combined with its very expensive valuation grade, reinforces the notion that Delta Air Lines is not a favorable investment at its current price of 48.25.