Copa Holdings (CPA) Down 0.4% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Copa Holdings (CPA). Shares have lost about 0.4% in that time frame, outperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Copa Holdings due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Copa Holdings Beats on Q2 Earnings & Revenues
Copa Holdings’ quarterly earnings per share (EPS) of $3.92 surpassed the Zacks Consensus Estimate of $3.25 and rose 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.
Passenger revenues (contributed 95.6% to the top line) increased 17.8% from second-quarter 2022, owing to higher load factors and yields. Cargo and mail revenues fell 10.6% to $23.9 million due to lower cargo volumes and yields. Other operating revenues came in at $11.5 million, up 18.6% year over year on the back of revenues from non-air ConnectMiles partners.
Below, we present all comparisons (in % terms) with second-quarter 2022 levels (pre-coronavirus).
On a consolidated basis, traffic (measured in revenue passenger miles) grew 15.4% and capacity (measured in available seat miles) increased 13.6%. As a result, the load factor increased 1.3 percentage points to 86.1% in the reported quarter.
Passenger revenue per available seat miles increased 3.6% to 11.4 cents. Additionally, revenue per available seat mile increased 2.7% to 12 cents. Cost per available seat mile decreased 17%. Excluding fuel, the metric fell 0.8%. The average fuel price per liter fell 35.9% to $2.65.
Total operating expenses decreased 5.6% to $614.52 million due to the 27.7% decrease in fuel costs. Expenses on wages, salaries and other employee benefits rose 18.9% owing to growth in operational staff to support current capacity, as well as salary adjustments and provisions for variable compensation. Sales and distribution costs increased 0.7% due to an increase in ticket sales. Passenger servicing costs grew 33.5%. Flight operation costs increased 3.9%.
Copa Holdings exited the second quarter with cash and cash equivalents of $281.86 million compared with $242.31 million at March 2023-end. Total debt, including lease liabilities, was $1.8 billion compared with $1.7 billion at the end of March 2023.
CPA ended second-quarter 2023 with aconsolidated fleetof 101 aircraft, which comprises 67 Boeing 737-800s, 24 Boeing 737 MAX 9s, 9 Boeing 737-700s, and 1 Boeing 737-800 freighter. During the reported quarter, the carrier took delivery of two Boeing 737 MAX 9 aircraft.
Outlook for 2023
For 2023, Copa Holdings expects its consolidated capacity or ASMs to register 12-13% growth over 2022, and its operating margin is expected to be between 22% and 24%.
Load factor is now expected to be around 86% (prior view: 85%).
How Have Estimates Been Moving Since Then?
It turns out, estimates revision flatlined during the past month.
VGM Scores
Currently, Copa Holdings has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Copa Holdings has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Copa Holdings is part of the Zacks Transportation - Airline industry. Over the past month, SkyWest (SKYW), a stock from the same industry, has gained 3.7%. The company reported its results for the quarter ended June 2023 more than a month ago.
SkyWest reported revenues of $725.64 million in the last reported quarter, representing a year-over-year change of -9.2%. EPS of $0.35 for the same period compares with $1.07 a year ago.
SkyWest is expected to post earnings of $0.40 per share for the current quarter, representing a year-over-year change of -58.3%. Over the last 30 days, the Zacks Consensus Estimate has changed +135.8%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #2 (Buy) for SkyWest. Also, the stock has a VGM Score of B.
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