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Azul (AZUL) to Report Q2 Earnings: What's in the Offing?

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Azul S.A. AZUL is slated to report second-quarter 2020 financial numbers on Aug 13, before market open.

The Zacks Consensus Estimate for second-quarter bottom line has been constant at a loss of $1.11 per share in the past 60 days. Nevertheless, the company has an impressive earnings history. The company’s earnings have outperformed the Zacks Consensus Estimate in three of the preceding four quarters (missing the same in one). Azul has a trailing four-quarter earnings surprise of more than 100%, on average.

Let’s discuss the factors that are likely to have impacted the carrier’s second-quarter performance.

Low air travel demand due to the coronavirus pandemic is likely to have dented Azul’s second-quarter performance and hurt passenger revenues. Load factor (% of seats filled by passengers) is expected to have declined due to lower traffic demand.

However, in the face of dwindling passenger revenues cargo revenues (air transportation of health care materials, including medicine, masks, and hospital equipment) are likely to have increased in the second quarter. The Zacks Consensus Estimate for current quarter revenues is pegged at 103.4 million, which indicates year-over-year decline of 84.5%.

AZUL SA Price and EPS Surprise

AZUL SA Price and EPS Surprise
AZUL SA Price and EPS Surprise

AZUL SA price-eps-surprise | AZUL SA Quote

With coronavirus affecting demand significantly, low fuel prices are expected to have partly offset the adversities and contributed to the bottom line in the second quarter. The Zacks Consensus Estimate for current-quarter earnings indicates year-over-year decline of more than 100%.

What Does the Zacks Model Say?

Our proven model does not predict an earnings beat for Azul this time around. This is because a stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. You can see the complete list of today’s Zacks #1 Rank stocks here.

Earnings ESP: Azul has an Earnings ESP of 0.00% since both the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at a loss of $1.11. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Azul carries a Zacks Rank #3, currently.

Highlights of Q1 Earnings

Azul incurred a loss of $1.63 per share on an adjusted basis in the first quarter of 2020, wider than the Zacks Consensus Estimate of a loss of 50 cents. In the year-ago quarter, the company reported adjusted earnings of 49 cents per share. First-quarter results were affected by coronavirus-induced drop in demand and depreciation of the Brazilian real. Fuel cost hedging losses also put pressure on performance.

Snapshots of Sectorial Releases

Below we present the second-quarter 2020 reports of three top-ranked companies in the Zacks Transportation sector.

Canadian National Railway Company’s CNI second-quarter 2020 earnings (excluding 36 cents from non-recurring items) of 92 cents per share met the Zacks Consensus Estimate. However, the bottom line declined 28.7% year over year. Quarterly revenues of $2,315 million missed the Zacks Consensus Estimate of $2,407.6 million and also fell 21.8% year over year. The downtick was primarily caused by COVID-19 led soft volumes across most commodity groups and lower fuel surcharge rates. The company carries a Zacks Rank #2, presently.

Canadian Pacific Railway Limited’s CP second-quarter 2020 earnings (excluding 42 cents from non-recurring items) of $2.94 per share surpassed the Zacks Consensus Estimate of $2.75. However, quarterly earnings declined 8.4% year over year. Quarterly revenues of $1,292.8 million lagged the Zacks Consensus Estimate of $1,299.9 million. The top line also fell 12.5% on a year-over-year basis due to lower freight revenues. The company presently carries a Zacks Rank of 2.

Werner Enterprises WERN delivered second-quarter 2020 earnings per share (excluding 6 cents from non-recurring items) of 62 cents, which surpassed the Zacks Consensus Estimate of 40 cents. However, the bottom line dipped 1.6% year over year. Moreover, total revenues of $569 million missed the Zacks Consensus Estimate of $580.8 million as well as dropped 9.3% year over year due to soft fuel surcharge and logistics revenues. The company sports a Zacks Rank of 1, currently.

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Canadian National Railway Company (CNI) : Free Stock Analysis Report
 
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AZUL SA (AZUL) : Free Stock Analysis Report
 
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