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Gol Linhas (GOL) Q2 Earnings Meet, Revenues Top Estimates

Zacks Equity Research

Gol Linhas Aereas Inteligentes S.A.'s GOL earnings (excluding 39 cents from non-recurring items) of 11 cents per share in the second quarter of 2019 matched the Zacks Consensus Estimate. The company reported a loss in the year-ago period. Results were partly affected by 8.8% depreciation of the Brazilian real against the US dollar and high fuel costs.

Meanwhile, net revenues of $801.1 million (R$3.14 billion) surpassed the Zacks Consensus Estimate of $702.4 million and also increased year over year owing to solid demand in the corporate segment and capacity discipline. Passenger revenues accounting for bulk (94.2%) of the top line surged 37.9% on a year-over-year basis.

The revenue beat and its year-over-year rise perhaps pleased investors. Evidently, shares of the company gained more than 4% at the close of business on Aug 1.

Gol Linhas Aereas Inteligentes S.A. Price, Consensus and EPS Surprise

 

Gol Linhas Aereas Inteligentes S.A. Price, Consensus and EPS Surprise

Gol Linhas Aereas Inteligentes S.A. price-consensus-eps-surprise-chart | Gol Linhas Aereas Inteligentes S.A. Quote


Operational Statistics

Consolidated revenue passenger kilometers (RPK) — measure for revenues generated per kilometer per passenger — increased 11.7% year over year. The metric climbed 6.1% and 71.1% each on the domestic and international front.

Consolidated available seat kilometers (ASK), measuring an airline's passenger carrying capacity, rose 6.5% year over year. While domestic capacity inched up 1.3%, international capacity expanded 53.4%.

Furthermore, the company’s total load factor (percentage of seats filled with passengers) was 82% compared with 78.1% in the year-ago period. The metric improved as traffic growth outpaced capacity expansion.

While net passenger revenue per ASK augmented 29.5%, net revenue per ASK grew 25.3%. However, fuel price per liter increased 9.8%. Also, Cost per ASK rose 13.6% year over year. Besides, the metric increased 12.4% excluding fuel.

Other Metrics

Gol Linhas, sporting a Zacks Rank #1 (Strong Buy), exited the second quarter with a total liquidity (including cash and cash equivalents, financial investments, restricted cash and accounts receivable) of R$3.7 billion, reflecting an increase of R$644.4 million from the year-ago reported figure. Additionally, long-term debt totaled R$11.15 billion at the end of the reported quarter compared with R$10.31 billion in the year-ago period. You can see the complete list of today's Zacks #1 Rank stocks here.

Total operating expenses escalated 29.4% year over year to R$2.82 billion. The metric excluding fuel surged 32.9% year over year. Meanwhile, total volume of departures inched up 0.9% and the number of seats increased 3.2%.

Q3 Outlook

The company envisions CASK to ascend approximately 11-13% year over year in the third quarter. Additionally, Revenue per ASK (RASK) is estimated to augment between 11% and 13%.

2019 Outlook

GOL Linhas anticipates net revenues of approximately R$13.5 billion compared with R$13 billion expected previously. Further, earnings are envisioned in the range of 80-95 cents per share. Previously, the estimate was in the 70-90 cents band. The mid-point (87.5) of the guided range is below the Zacks Consensus Estimate of 89 cents. For fuel price, the forecast has been revised to R$2.9 per liter from R$3. Meanwhile, the prediction for pre-tax margin has been retained at 10%.

Capital expenditures are still anticipated at R$700 million. Also, the effective tax rate estimate is unchanged at 22%. The company’s expected fleet size at the end of the year is anticipated between 125 and 127 (earlier expectation: 124-127). The prediction for capacity now stands at 9-11% compared with 7-10% projected earlier.

For average load factor, the forecast is still in the 79-81% range. The EBITDA margin prediction has also been reiterated at 28%.

2020 View

For 2020, the carrier anticipates fleet size to grow between 131 and 136 (earlier view was between 128 and 131). Additionally, capacity is now predicted at 6-8% compared with 7-10% expected earlier. Moreover, load factor is estimated in the range of 80-82%, above 79-81% envisioned previously. The guidance for total net revenues has also been raised to R$15.5 billion from R$14.5 billion. Meanwhile, for effective tax rate, the forecast is intact at 22%. The same for capex is reaffirmed at R$650 million as well.

The company also maintains the projection for fuel price per liter at R$3.1. The expectations for EBITDA margin and pre-tax margin are also flat at 29% and 12%, respectively. However, earnings per share are now anticipated between $1.2 and $1.5 compared with $1 and $1.3, guided previously.

Upcoming Releases

Investors interested in the broader Transportation sector are keenly awaiting second-quarter earnings reports from key players, namely Expeditors International of Washington, Inc. EXPD, Air Lease Corporation AL and Hertz Global Holdings, Inc HTZ. While Expeditors and Hertz will report earnings numbers on Aug 6, Air Lease will release the same on Aug 8.

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