Jim Cramer on Delta: There’s a difference between the stock and the company

CNBC’s Jim Cramer shared his assessment of Delta Air Lines stock, which reported a revenue miss on Thursday. He said investors should understand that there is a difference between Delta as a stock and Delta as a company.

“In recent years, we’ve convinced ourselves that the airline industry has discipline on pricing, but historically, that’s not usually the case, and now there’s a skunk at the garden party,” he said. “Delta the company is terrific. Delta the airline stock is only as good as the weakest competitors, because they’re leading a race to the bottom, and that’s killing it.”

Although the U.S. carrier posted record revenue for the second quarter, the figures still fell below expectations, coming in at $15.41 billion versus the $15.45 billion consensus estimate from LSEG. Management reported robust summer travel demand, with CEO Ed Bastian saying on the earnings call that TSA travel volumes were up 7% from the year-earlier period.

But Bastian also said “domestic industry seat growth has accelerated through the summer months, impacting yield performance in the main cabin,” which Cramer said indicates the Atlanta-based airline has more seats than it can fill.

By Thursday’s close, Delta shares were trading down nearly 4%. Cramer also pointed out that the stock’s price hasn’t seen significant gains over the past decade.

The airline is the most profitable in the industry, and its lackluster quarter does not bode well for competitors. Although Cramer conceded that Delta is the best of the bunch, he stressed that investors should consider a stock’s entire sector before they buy any shares.

“If you’re going to buy a stock, any stock, first see how it’s done over time. Second, see how its cohort has done,” he said. “You can take one look at the jampacked plane and want to buy Delta Air Lines stock, or you can take one look at the pathetic chart, and know for sure that the stock’s, sadly, simply not worth owning.”

Delta did not immediately respond to request for comment.