Why Is Copa Holdings (CPA) Up 8.5% Since Last Earnings Report?
A month has gone by since the last earnings report for Copa Holdings (CPA). Shares have added about 8.5% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Copa Holdings due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Copa Holdings Beats on Q3 Earnings
Copa Holdings’ third-quarter 2023 earnings per share (EPS) of $4.39 surpassed the Zacks Consensus Estimate of $3.74 and rose 51% year over year. Revenues of $867.7 million missed the Zacks Consensus Estimate of $879.3 million but improved 7.2% year over year on the back of passenger revenues.
Passenger revenues (which contributed 96% to the top line) increased 7.6% from third-quarter 2022, owing to higher load factors and yields. Cargo and mail revenues fell 11.2% to $23.43 million due to lower cargo volumes and yields. Other operating revenues came in at $10.97 million, up 24.5% year over year.
Below, we present all comparisons (in % terms) with third-quarter 2022 levels (pre-coronavirus).
On a consolidated basis, traffic (measured in revenue passenger miles) grew 13.3% and capacity (measured in available seat miles) increased 12.1%. As a result, the load factor increased 0.9 percentage points to 87.8% in the reported quarter.
Passenger revenue per available seat miles decreased 4% to 11.7 cents. Additionally, revenue per available seat mile decreased 4.3% to 12.2 cents. Cost per available seat mile decreased 11.2%. Excluding fuel, the metric fell 2.1%. The average fuel price per liter fell 21.3% to $3.00.
Total operating expenses decreased 0.5% to $662.69 million due to the 13.5% decrease in fuel costs. Expenses on wages, salaries and other employee benefits rose 12.2%. Sales and distribution costs decreased 11%. Passenger servicing costs grew 22.6%. Flight operation costs increased 15.7%.
Copa Holdings exited the third quarter with cash and cash equivalents of $236.87 million compared with $281.86 million at June 2023-end. Total debt, including lease liabilities, was $1.7 billion compared with $1.8 billion at the end of June 2023.
CPA ended third-quarter 2023 with a consolidated fleet of 103 aircraft, which comprises 67 Boeing 737-800s, 26 Boeing 737 MAX 9s, nine Boeing 737-700s, and one Boeing 737-800 freighters.
In November 2023, CPA took delivery of two Boeing 737 MAX 9 aircraft and anticipates to receive one additional aircraft during the remainder of 2023. CPA expects to end 2023 with 106 aircraft.
In October 2023, CPA completed its previously announced share repurchase program. On Nov 15, 2023, CPA’s board of directors approved a new $200 million share repurchase program.
Further, CPA will make its fourth dividend payment of 82 cents per share on Dec 15, 2023, to all Class A and Class B shareholders on record as of Nov 30, 2023.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision.
VGM Scores
At this time, Copa Holdings has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. However, the stock was allocated a grade of A on the value side, putting it in the top quintile 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
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, 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 belongs to the Zacks Transportation - Airline industry. Another stock from the same industry, Ryanair (RYAAY), has gained 13.4% over the past month. More than a month has passed since the company reported results for the quarter ended September 2023.
Ryanair reported revenues of $5.36 billion in the last reported quarter, representing a year-over-year change of +32.5%. EPS of $7.21 for the same period compares with $5.32 a year ago.
Ryanair is expected to post earnings of $0.08 per share for the current quarter, representing a year-over-year change of -91.6%. Over the last 30 days, the Zacks Consensus Estimate remained unchanged.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Ryanair. Also, the stock has a VGM Score of A.
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