Delta Air Lines' Improving RS Rating and Its Implications for Long-Term Investor Confidence

The Relative Strength (RS) Rating of Delta Air Lines (DAL) has emerged as a critical barometer of its market leadership and investor sentiment in 2025. As of October 15, 2025, Delta's RS Rating stood at 73, having climbed from 64 earlier in the year and following a peak of 94 in January, according to MacroTrends. This trajectory, while volatile, underscores the stock's ability to outperform a significant portion of the market over the past 52 weeks, according to Fitch Ratings. Such technical strength, combined with a series of credit rating upgrades and robust financial performance, has positioned Delta as a focal point for investors seeking exposure to a recovering airline sector.

Financial Momentum: Earnings, Revenue, and Free Cash Flow

Delta's recent financial results have been a cornerstone of its improving RS Rating. For the third quarter of 2025, the company reported adjusted earnings per share (EPS) of $1.71, surpassing analyst expectations of $1.53 and reflecting a 4% year-over-year increase in adjusted operating revenue to $15.2 billion, per Delta's announcement. Premium travel segments, including first-class and extra-legroom economy seats, drove nearly 40% of total revenue, growing 9% year-over-year to $5.8 billion, the announcement noted. These figures highlight Delta's ability to capitalize on shifting consumer preferences toward premium services, a trend that has bolstered its margins.

Free cash flow has also demonstrated remarkable resilience. For the year ending June 30, 2025, Delta generated $1.802 billion in free cash flow, with year-to-date totals reaching $2.8 billion by October, per MacroTrends. The company projects full-year free cash flow of $3.5 billion to $4 billion, according to Alpha Cubator. Such liquidity not only supports debt reduction but also provides flexibility for shareholder returns or strategic investments.

Credit Rating Upgrades and Market Leadership

Delta's financial strength has not gone unnoticed by credit rating agencies. In February 2025, Moody's upgraded Delta's credit rating to its highest level in decades, citing improved operations, free cash flow, and debt reduction. This marked the third credit rating upgrade in eight months, with Fitch affirming Delta's rating at 'BBB-' and revising its outlook to positive in August 2025. These upgrades signal a narrowing of Delta's risk profile relative to peers and reinforce its status as a sector leader.

The interplay between credit ratings and the RS Rating is instructive. While the RS Rating measures technical performance, credit ratings reflect fundamental strength. Delta's ability to improve on both fronts-posting an 11.2% operating margin in Q3 2025, according to Delta's Q3 release-demonstrates a rare alignment of momentum and stability. This dual-track performance has likely attracted institutional investors, who often prioritize both relative strength and creditworthiness in their portfolios, per MacroTrends.

Risk-Adjusted Returns: Beta and Sharpe Ratio Considerations

Despite these positives, Delta's risk profile remains elevated. Its beta of 1.51 indicates volatility 51% greater than the market average, a characteristic inherent to cyclical sectors like aviation. However, this risk must be contextualized against the company's recent Sharpe ratio of -0.08 for the 1-year period ending October 2025, per Alpha Cubator. While negative, this figure contrasts with longer-term metrics: a 3-year Sharpe ratio of 0.29 and a 5-year ratio of 0.52. These suggest that while short-term volatility has dented risk-adjusted returns, Delta's long-term trajectory remains favorable for investors with a higher risk tolerance.

Implications for Long-Term Investor Confidence

The convergence of improving RS Rating, credit upgrades, and strong financial metrics paints a compelling case for Delta's long-term appeal. Its global network and premium service offerings, highlighted by Moody's as differentiators, provide a durable competitive edge. Moreover, Delta's guidance for Q4 2025-projecting adjusted EPS of $1.60–$1.90-exceeds Wall Street forecasts and reaffirms its full-year target of $6, according to Delta's Q3 release. Such confidence in future performance is a key driver of investor sentiment.

However, the high beta and mixed Sharpe ratio data necessitate caution. Investors must weigh Delta's potential for outperformance against its susceptibility to macroeconomic shocks, such as fuel price volatility or demand fluctuations. For those prioritizing momentum and sector leadership, Delta's RS Rating and credit profile offer a compelling narrative. For risk-averse investors, the stock's volatility may require hedging or diversification.

Conclusion

Delta Air Lines' improving RS Rating is more than a technical indicator-it is a reflection of its strategic and financial resilience. With a robust balance sheet, strong free cash flow, and a track record of credit upgrades, Delta has positioned itself as a leader in a sector poised for sustained recovery. While its risk profile remains elevated, the company's ability to generate momentum and adapt to market dynamics suggests that long-term investor confidence is well-founded. As the airline industry navigates a post-pandemic landscape, Delta's dual focus on operational excellence and capital discipline may continue to drive both relative strength and shareholder value.