Why Is Copa Holdings (CPA) Up 2.3% Since Last Earnings Report?
A month has gone by since the last earnings report for Copa Holdings (CPA). Shares have added about 2.3% in that time frame, underperforming 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 drivers.
Copa Holdings Beats on Q2 Earnings
Copa Holdings second-quarter 2024 earnings per share of $2.88 surpassed the Zacks Consensus Estimate of $2.77 but declined 26.5% year over year. Revenues of $819.4 million lagged the Zacks Consensus Estimate of $841 million but rose 1.3% year over year on the back of upbeat passenger revenues.
Passenger revenues (which contributed 95.4% to the top line) increased 1% from second-quarter 2023, owing to a 10.6% year-over-year increase in passenger traffic, partly offset by an 8.7% decrease in passenger yield. Cargo and mail revenues grew 5.4% to $25.18 million due to higher volumes, partly offset by lower cargo yields. Other operating revenues were $12.72 million, up 10.4% year over year due to higher ConnectMiles revenues from non-air partners.
Operating margin declined 4.6 percentage points from the year-ago quarter.
On a consolidated basis, Copa Holdings traffic (measured in revenue passenger miles) grew 10.6% year over year, and capacity (measured in available seat miles) increased 9.7% from the year-ago quarter. With traffic growth outpacing capacity expansion, the load factor (percentage of seats filled by passengers) increased 0.7 percentage points to 86.8% in the reported quarter.
Passenger revenue per available seat miles decreased 7.9% year over year to 10.5 cents. Additionally, revenue per available seat mile (RASM) declined 7.7% to 11 cents. Cost per available seat mile dipped 2.1%. Excluding fuel, the metric fell 5.8%. The average fuel price per gallon grew 5.2% to $2.79.
Total operating expenses increased 7.4% year over year to $659.9 million, owing to higher capacity, offset by lower maintenance, materials and repair costs, and sales and distribution costs. Fuel costs rose 14.9% year over year. Expenses on wages, salaries, benefits, and other employee expenses rose 8.6% year over year. Sales and distribution costs decreased 7.8% year over year. Passenger servicing costs grew 28.5% from the year-ago quarter. Flight operation costs increased 27.6% from the second quarter of 2023.
Copa Holdings exited the second quarter with cash and cash equivalents of $200.64 million compared with $170.52 million at the prior-quarter end. Total debt, including lease liabilities, was $1.8 billion compared with $1.7 billion at the first-quarter end.
CPA ended the second quarter with a consolidated fleet of 109 aircraft, which comprises 67 Boeing 737-800s, 32 Boeing 737 MAX 9s, nine Boeing 737-700s and one Boeing 737-800 freighter.
2024 Outlook
CPA’s management now expects consolidated capacity to grow 9% (prior view: 10%) year over year. RASM is now expected to be 11.5 cents (prior view: 12 cents).
The load factor is now expected to be 86.5% (prior view: 87%). Management anticipates an operating margin of 21.
Non-fuel unit costs are anticipated to be 5.9 cents. Fuel cost is expected to be $2.70 per gallon, down from prior guidance of $2.85.
Copa Holdings expects to end 2024 with 112 aircraft.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
The consensus estimate has shifted -23.71% due to these changes.
VGM Scores
Currently, Copa Holdings has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was 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 B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. 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 is part of the Zacks Transportation - Airline industry. Over the past month, Hawaiian Holdings (HA), a stock from the same industry, has gained 33.2%. The company reported its results for the quarter ended June 2024 more than a month ago.
Hawaiian Holdings reported revenues of $731.91 million in the last reported quarter, representing a year-over-year change of +3.5%. EPS of -$1.37 for the same period compares with -$0.47 a year ago.
Hawaiian Holdings is expected to post a loss of $1.60 per share for the current quarter, representing a year-over-year change of -50.9%. Over the last 30 days, the Zacks Consensus Estimate has changed -23.8%.
Hawaiian Holdings has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of F.
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Copa Holdings, S.A. (CPA) : Free Stock Analysis Report
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