Is a Beat in Store for Copa Holdings (CPA) in Q3 Earnings?
Copa Holdings CPA is scheduled to report third-quarter 2023 results on Nov 15, after market close.
The Zacks Consensus Estimate for CPA’s third-quarter 2023 earnings has been revised 24.1% upward year over year to $3.61 per share. CPA has an impressive earnings surprise history, having surpassed the consensus estimate in each of the preceding four quarters, the average beat being 15.1%.
Given this backdrop, let’s unearth the factors likely to have influenced its performance in the quarter under review.
We expect upbeat air-travel demand, particularly on the domestic front, to have boosted CPA’s top-line performance. Passenger revenues, which account for the bulk of the top line, are likely to have been high, in turn, boosting total revenues. Our estimate for passenger revenues is pegged at $816.5 million, indicating a 5.5% rise year over year. The Zacks Consensus Estimate for revenues has improved 8.5% year over year.
Riding on the buoyant air-travel demand, traffic (measured in revenue passenger miles) is likely to increase 9.3% year over year, per our estimate. To meet the demand upsurge, CPA is expanding capacity. We expect capacity (measured in available seat miles) to grow 9.1% from third-quarter 2022 actuals.
Copa Holdings, S.A. Price and EPS Surprise
Copa Holdings, S.A. price-eps-surprise | Copa Holdings, S.A. Quote
However, high fuel cost might have affected the bottom-line performance in the quarter under discussion. Our estimate is pegged at $2.75 per share. Even though fuel price has come down from the highs witnessed earlier, it still remains at an elevated level.
What Our Model Says
Our proven model predicts an earnings beat for Copa Holdings this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
CPA currently has an Earnings ESP of +15.06% (while the Most Accurate Estimate is pegged at $4.15, the Zacks Consensus Estimate is pegged at $3.61) and a Zacks Rank #3.
Highlights of Q2
Copa Holdings’ second-quarter 2023 earnings per share of $3.92 surpassed the Zacks Consensus Estimate of $3.25 and climbed more than 100% year over year. Revenues of $809.2 million beat the Zacks Consensus Estimate of $797 million and improved 16.7% year over year on the back of passenger revenues.
Other Stocks to Consider
Here are a few stocks from the broader Zacks Transportation sector that investors may consider, as our model shows that these have the right combination of elements to beat on their third-quarter 2023 earnings.
Ardmore Shipping ASC currently has an Earnings ESP of +4.65% and carries a Zacks Rank of 3. ASC is slated to report third-quarter 2023 results on Nov 7.
We expect Ardmore Shipping’s results to reflect the bullishness surrounding the tanker market, as product tanker rates are currently at healthy levels despite minor hiccups. Also, the normalization of economic activities and an uptick in world trade following the removal of COVID-19-induced restrictions are expected to have boosted ASC’s performance.
GXO Logistics GXO currently has an Earnings ESP of +4.50% and a Zacks Rank #3. GXO will release quarterly numbers on Nov 7.
The rapid growth of e-commerce, automation and outsourcing should aid GXO’s third-quarter results. The company’s efforts to strengthen its logistics capabilities also bode well.
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Copa Holdings, S.A. (CPA) : Free Stock Analysis Report
Ardmore Shipping Corporation (ASC) : Free Stock Analysis Report
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