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Will Passenger Revenues Boost Azul's (AZUL) Q1 Earnings?

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Azul (AZUL - Free Report) is scheduled to release its first-quarter 2019 financial numbers on May 9, before market open. The Zacks Consensus Estimate for earnings and revenues is pegged at 43 cents and $694.12 million, respectively.

In the last reported quarter, this Latin-American airline company’s earnings per ADS of 31 cents fell short of the Zacks Consensus Estimate by 18 cents. The bottom line also plunged on a year-over-year basis. This downturn was due to high fuel costs and devaluation of the Brazilian Real. While the fuel price per liter surged 37.2%, the Brazilian Real depreciated 17.3% year over year. Notably, this marked the only earnings miss in the trailing four reported quarters.

AZUL SA Price and EPS Surprise

 

AZUL SA Price and EPS Surprise | AZUL SA Quote

Investors will be hoping that Azul brushes aside the disappointment of the fourth quarter of 2018 and surpasses the earnings estimate in the soon-to-be-reported quarter.

However, our model indicates that the company might not beat on earnings in first-quarter 2019. This is because a stock needs to have — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — for this to happen. Zacks Rank #4 (Sell) or 5 (Strong Sell) stocks are best avoided, especially if they have a negative Earnings ESP. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: Azul has an Earnings ESP of 0.00%. The Most Accurate Estimate is in line with the Zacks Consensus Estimate.

Zacks Rank: Azul carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Let’s delve deeper and find out the factors likely to impact Azul’s quarterly results.

We expect upbeat passenger revenues to boost this Latin-American company’s top line in the soon-to-be-reported quarterbacked by solid demand for air travel mainly on the domestic front. Load factor (% of seats filled by passengers) is anticipated to increase as traffic growth outpaced capacity expansion in the three-month period.

Favorable air fares are also likely to drive revenues in the quarter. However, factors like unfavorable currency fluctuations are likely to hurt Azul’s first-quarter results as was the case with another Latin-American carrier, GOL Linhas , whose first quarter results were announced on Apr 30.Also, high fuel costs are likely to hurt Azul’s bottom line in the soon-to-be-reported quarter.

Moreover, in March 2019, Azul entered into a non-binding agreement with Avianca Brasil to acquire some of its assets for $105 million. Currently, Avianca Brasil is operating under bankruptcy court protection on fears of aircraft repossession following outstanding payments to aircraft lessors. We expect a detailed update on the issue on Azul’s first-quarter conference call.

Upcoming Releases

Investors interested in the broader Zacks Airline industry are keenly awaiting the first-quarter 2019 earnings report of another Latin-American carrier, Copa Holdings (CPA - Free Report) , on May 8.

Key Pick

Investors interested in the Zacks Transportation sector may consider Expeditors International of Washington (EXPD - Free Report) as it possesses the right combination of elements to beat on earnings in its next quarterly release.

Expeditors, scheduled to report first-quarter 2019 results on May 7, has an Earnings ESP of +0.47% and a Zacks Rank of 3.

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