Delta Air Lines, Inc. (NYSE: DAL ) stock has struggled so far in 2018, but investors are hoping the company’s second-quarter earnings report on July 12 won’t be as bad some have feared.

Last month, Delta lowered its second-quarter earnings per share guidance due to higher fuel costs, but analysts are still expecting earnings on the high end of the updated range.

[See: 7 of the Best Dividend Stocks to Buy for 2018 . ]

Delta guided for second-quarter earnings per share of between $1.65 and $1.75, but consensus analyst expectations are for $1.72. Analysts also expect revenue of $11.67 billion, up 8.2 percent from a year ago. Delta reported record revenue in the first quarter of 2018.

Investors will also be watching key airline efficiency metric revenue per available seat mile. Delta reported 5 percent RASM growth in the first quarter and is guiding for second-quarter RASM growth of between 4 and 5 percent.

Despite rising fuel costs, Bank of America analyst Andrew Didora says Delta is making all the right moves.

“We expect capacity adjustments post peak summer flying, which should allow this revenue momentum to continue,” Didora says.

He says higher fuel costs are nothing new for airlines, and investors will likely focus more on capacity and revenue.

“We forecast the company's free cash flow in 2018 will equate to nearly half of the entire industry's cash generation, which should allow DAL to continue to address its pension deficit, de-risk the balance sheet and return cash to shareholders,” Didora says.

After a strong July 4 weekend, Didora says U.S. airline industry passenger revenue per available seat mile in the second quarter is tracking above Bank of America’s previous forecasts. Bank of America is calling for second-quarter EPS of $1.75, slightly ahead of consensus estimates. For the full year, the firm is predicting $5.93 in EPS from Delta .

[See: 7 of the Best Stocks to Buy for 2018 .]

In the longer term, Morningstar analyst Chris Higgins says Delta will make history during the next economic downturn by maintaining positive operating margins throughout the full cycle.

“This signals a clear break with much of the industry’s history, which featured boom-bust cycles,” Higgins says.

Bank of America has a “buy” rating and $71 price target for Delta. Morningstar has an “undervalued” rating and $62 fair value estimate for DAL stock .

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Raymond Mitchell, Author

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