OK, I know that there was an article about Delta and US merging which is largely considered a smokescreen by people in the industry, but this guy is out telling people where to invest and he apparently only knows about this industry from half-reading headlines.
"Southwest 50% Undervalued With Delta-US Airways Takeover Talk"
That's nonsense right off the bat for two reasons, but even better is this section...
"From a multiples perspective, Southwest is equally attractive. It trades at 35.8x past earnings but only 8.1x forward earnings. This compares to 3.8x forward earnings for Delta and 3.3x for US Airways. "
Huh? So it trades for nearly twice forward earnings as DL and US, but that is a reason to call it "attractive"?
"Delta is similarly attractive. The company is likely to be the center of takeover activity in the airline industry. I see it possibly merging with US Airway to gain scale and unlock revenue and cost synergies. "
I'd say it's a bit more likely AA is going to be at the center of takeover activity. Maybe he had a chicken bone caught in his "airway". Maybe he is confusing Delta and AA because then he said this:
"It is rumored that US Airways is currently discussing with creditors about the proposed merger. In order to prevent long-term bankruptcy, scale is key in the sense that it drives operational efficiency. "
Yeah, they are discussing a merger with AA creditors, not Delta creditors. AA isn't even mentioned in the whole article. Then he recommends investing in Delta because the merger with US that isn't really happening will "prevent long-term bankruptcy". Sounds like a brilliant case for buying any company... I wasn't aware they were near bankruptcy? Or are we talking about US? Worst article ever...
United787 From United States of America, joined May 2005, 3066 posts, RR: 1
Reply 1, posted (3 years 6 months 3 weeks 4 hours ago) and read 2740 times:
Reminds me of a Credit Suisse call I listened in on after US tried to go after DL back when DL was in Chap. 11...the aviation analyst talked about their fleets being extremely compatible and their route networks being complementary...ignoring the obvious ATL-CLT overlap...
enilria From Canada, joined Feb 2008, 9242 posts, RR: 15
Reply 2, posted (3 years 6 months 3 weeks ago) and read 2280 times:
Quoting United787 (Reply 1): Reminds me of a Credit Suisse call I listened in on after US tried to go after DL back when DL was in Chap. 11...the aviation analyst talked about their fleets being extremely compatible and their route networks being complementary...ignoring the obvious ATL-CLT overlap...
You know if you are getting published by one of these investing sites I'd think they have a duty to not hire motley fools.