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-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.
Biggest Tech Breakthrough in a Generation
Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.
See 8 breakthrough stocks now>>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
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
To read this article on Zacks.com click here.
Zacks Investment Research