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Why Is Copa Holdings (CPA) Down 7.3% Since its Last Earnings Report?

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It has been about a month since the last earnings report for Copa Holdings, S.A. CPA. Shares have lost about 7.3% in that time frame.

Will the recent negative trend continue leading up to its next earnings release, or is CPA due for a breakout? 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.

First-Quarter Results – May 9, 2018

Copa’s earnings per share of $3.22 surpassed the Zacks Consensus Estimate of $2.78. The bottom-line figure surged 32.5% on a year-over-year basis. Quarterly revenues too increased 15.9% year over year to $715 million and outpaced the consensus mark of $692 million. The year-over-year improvement in the top line was primarily owing to 16.3% growth in passenger revenues.

While passenger unit revenue per available seat mile (PRASM) climbed 7.2%, yield per passenger mile improved 5.3%. Passenger traffic (on a consolidated basis) rose 10.4% and capacity was up 8.4% in first-quarter 2018. Load factor expanded 150 basis points to 83% as traffic growth outweighed capacity increase.

Additionally, unit revenue per available seat mile (RASM) improved 7.2%. This apart, operating cost per available seat mile (CASM), excluding fuel, increased 1.1% in the reported quarter. The metric, including fuel costs, was up 5.6%. Average fuel price per gallon increased 17.6% year over year to $2.16 per gallon. Fuel prices are anticipated to be 2.25 per gallon in the second quarter.

For 2018, Copa expects capacity to grow by approximately 9% on a year-over-year basis. Operating margin is anticipated between 17% and 19%.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. There have been three revisions lower for the current quarter. Last month, the consensus estimate has shifted downward by 14% due to these changes.

Copa Holdings, S.A. Price and Consensus

 

Copa Holdings, S.A. Price and Consensus | Copa Holdings, S.A. Quote

VGM Scores

At this time, CPA has a nice Growth Score of B, however its Momentum is doing a bit better with an A. Following the exact same course, the stock was also 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.

Based on our scores, the stock is equally suitable for value and momentum investors than growth investors.

Outlook

Estimates have been broadly trending downward for the stock and the magnitude of these revisions indicates a downward shift. Notably, CPA has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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