Why does Delta Airlines stock sell at a seemingly paltry p-e ratio of 9?
The airline stocks have traditionally sold at low p-e ratios because they have over time not been able to show good, consistent earnings growth. There are so many variables that keep profitability at risk. You often have major labor issues. You have a lot of competition, which causes pricing pressures. You have significant commodity risks because you have to be concerned with the price of oil and fuel. It is a very difficult industry to manage in this day and age. Deltas smaller size puts it in a difficult competitive position. Q: What do you think I should do with my AOL stock? A: AOL is unbelievably expensive and overowned by major institutional and mutual-fund managers, and I would be very concerned that there is a lot more downside to AOL than upside. All the good news is already reflected in the current price of the company, so I would be more inclined to sell than to buy. Q: I feel the cyclical are getting too much attention. Won’t their valuations soon reach high levels? A: Anyt
