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LATAM Airlines (LTM) to Report Q1 Earnings: What's in Store?

Zacks Equity Research

LATAM Airlines LTM is scheduled to report first-quarter 2020 earnings on Jun 1.

The company has a mixed earnings record, having delivered a positive surprise in two of the last four quarters while missing estimates in the remaining two. The average miss is 33.8%.
 

LATAM Airlines Group S.A. Price and EPS Surprise

 

LATAM Airlines Group S.A. Price and EPS Surprise

LATAM Airlines Group S.A. price-eps-surprise | LATAM Airlines Group S.A. Quote

Against this backdrop, let’s dig deeper to find out the factors that might have impacted this Latin American company’s March-quarter performance.

Declining passenger revenues due to coronavirus-induced low air-travel demand are likely to have affected the performance of LATAM Airlines in the to-be-reported quarter. To mitigate this crisis, the carrier reduced its capacity. However, load factor (% of seats filled by passengers) is likely to have contracted due to greater fall in traffic.

Currency-related headwinds also might have hampered LATAM Airlines’ performance. However, the plunge in oil prices (by 66.5%) during the January-March period is a bonus and is expected to have aided the bottom line in the quarter to be reported. Moreover, the quarter is likely to reflect the positive impact of several cost-cutting measures in the impending earnings results. Such efforts were made by the company to cope with a lackluster air-travel demand scenario.

What Does the Zacks Model Say?

Our proven model does not conclusively predict an earnings beat for LATAM Airlines 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 a positive surprise. But that is not the case here. You can see the complete list of today’s Zacks #1 Rank stocks here.

Earnings ESP: LATAM Airlines has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: LATAM Airlines carries a Zacks Rank #3, currently.
 

Highlights of Q4 Earnings

In the last reported quarter, LATAM Airlines' earnings of 37 cents per share surpassed the Zacks Consensus Estimate of 24 cents. In fourth-quarter 2018, the company reported earnings of 25 cents. The year-over-year improvement was partly due to the 10.6% decrease in average fuel price per gallon. Total revenues increased year over year but missed the Zacks Consensus Estimate by 2.1%.

Performance of Some Other Latin American Carriers in Q1

Below we present the highlights of the first-quarter earnings reports of other Latin American carriers.

Copa Holdings’ CPA, which carries a Zacks Rank of 3, delivered first-quarter 2020 earnings of $1.75 per share, beating the Zacks Consensus Estimate by 19 cents. However, the bottom line was down17.1% year over year, primarily due to weak revenues. Quarterly revenues also declined 11.4% year over year to $595.5 million but beat the Zacks Consensus Estimate of $592.8 million. The year-over-year deterioration was caused by an 11.4% softness in passenger revenues.

Zacks#3 Ranked Azul 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. However, in the year-ago quarter, the company reported adjusted earnings of 49 cents per share. The first-quarter results were hurt by coronavirus-led drop in demand and depreciation of the Brazilian real. Fuel cost hedging losses also weighed on the company’s performance.

Gol Linhas GOL, which holds a Zacks Rank #2, posted earnings of 20 cents per share (excluding $3.08 from non-recurring items) for first-quarter 2020. The bottom line rose year over year on cost-saving initiatives. However, net operating revenues of $710.9 million missed the Zacks Consensus Estimate of $929.8 million and also declined year over year. Passenger revenues accounting for bulk (93.4%) of the top line dipped 3% on a year-over-year basis due to tepid air- travel demand following the coronavirus pandemic.

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Gol Linhas Aereas Inteligentes S.A. (GOL) : Free Stock Analysis Report
 
Copa Holdings, S.A. (CPA) : Free Stock Analysis Report
 
LATAM Airlines Group S.A. (LTM) : Free Stock Analysis Report
 
AZUL SA (AZUL) : Free Stock Analysis Report
 
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