April 22, 2018 / 8:03 PM / 3 months ago

Barron's: Delta, Goodyear stock have more upside than prices suggest

(Reuters) - Delta Air Lines, Goodyear Tire & Rubber and Lincoln National Corp may have more upside than their discounted share prices suggest, Barron’s reported.

A Delta Air Lines flight is pushed put of its gate at the airport in Salt Lake City, Utah, U.S., January 12, 2018. REUTERS/Mike Blake

The newspaper reviewed stocks trading at no more than about half the valuation of the Standard & Poor’s 500 index - which recently approached 17 times forward earning estimates - and spotlighted those not facing “obvious threats of structural decline” or “hitting cyclical peaks.”

Delta (DAL.N), which closed at $55.40 per share on Friday, is at 8.6 times earnings, a valuation Morgan Stanley analyst Rajeev Lalwani called “just too low,” according to Barron’s.

The Goodyear dealer in Westminster, Colorado United States July 28, 2017. REUTERS/Rick Wilking

Lalwani’s price target of $72 implies a 30 percent upside for Delta, which faces less competition in key markets than some of its peers, the paper reported.

Goodyear, (GT.O), trading at $27.01, 7.3 times earnings, is benefiting from car makers’ shift toward trucks, for which tires are more profitable, and its earnings per share (EPS) is expected to rise at mid-teen percentages the next two years, the paper noted.

Lincoln, (LNC.N), whose earnings depend heavily on annuities models that have seen decline in recent years, closed Friday at $71.58.

But its EPS is expected to rise 8 to 11 percent this year and each of the following two years, thanks in part to a strong stock market that has increased management fees, and an increased demand for savings products, Barron’s reported.

Reporting by Nick Brown; Editing by Cynthia Osterman

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