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What's in the Offing for Copa Holdings (CPA) in Q1 Earnings?

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Copa Holdings (CPA - Free Report) is scheduled to report first-quarter 2021 earnings on May 5, after market close.

The Zacks Consensus Estimate for first-quarter loss has narrowed to $2.21, from $2.31, 60 days ago. Let’s take a look at the factors that are expected to have influenced the company’s performance in the March quarter.

Improvement in air-travel demand in Latin America is expected to reflect in Copa Holdings’ passenger revenues. The Zacks Consensus Estimate for first-quarter passenger revenues indicates a 23.6% rise from the fourth-quarter 2020’s reported number. However, since travel demand continues to lag the pre-pandemic levels, the consensus mark for passenger revenues shows a 68.2% decline from the first-quarter 2020’s reported figure.

With this anticipated decline in passenger revenues, the company’s top line is likely to have been significantly affected when compared on a year-over-year basis. The company anticipates total revenues for the first quarter to be in the range of $170-$200 million. The Zacks Consensus Estimate for the same is pegged at $187.93 million, indicating a drop of 68.4% from the year-ago period’s reported number. However, the same suggests an 18.5% improvement from the fourth-quarter 2020 reported figure.

In response to the tepid demand, the airline reduced its capacity significantly. The Zacks Consensus Estimate for capacity, measured in available seat miles/ASMs, hints at a 53.3% plunge from the year-ago quarter’s reported level. The company estimates its first-quarter 2021 capacity to be around 40% of the 2019 levels.

Copa Holdings, S.A. Price and EPS Surprise

Copa Holdings, S.A. Price and EPS Surprise

Copa Holdings, S.A. price-eps-surprise | Copa Holdings, S.A. Quote

What Does the Zacks Model Say?

Our proven model does not conclusively predict an earnings beat for Copa Holdings this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of beating estimates, which is not the case here as elaborated below. You can see the complete list of today’s Zacks #1 Rank stocks here.

Earnings ESP: Copa Holdings has an Earnings ESP of +9.58% as the Most Accurate Estimate is pegged at a loss of $2, while the Zacks Consensus Estimate is poised at a loss of $2.21. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Copa Holdings carries a Zacks Rank #4 (Sell).

Highlights of Q4 Earnings

Copa Holdings incurred a loss (excluding $1.97 from non-recurring items) of $2 per share in fourth-quarter 2020, wider than the Zacks Consensus Estimate of a loss of $1.90. Quarterly revenues of $158.6 million beat the Zacks Consensus Estimate of $153.4 million. However, the top line plunged 76.7% year over year with passenger revenues (contributed 93% to the top line) declining 77.6%. Results were hurt by coronavirus-induced headwinds on the aviation industry.

Stocks to Consider

Investors interested in the broader Transportation  sector may consider Eagle Bulk Shipping (EGLE - Free Report) , Euronav NV (EURN - Free Report) and GasLog LP as these stocks possess the right combination of elements to beat on earnings this reporting cycle.

Eagle Bulk has an Earnings ESP of +64.52% and a Zacks Rank of 3.

Euronav has an Earnings ESP of +7.14% and a Zacks Rank #3.
GasLog has an Earnings ESP of +20.69% and a Zacks Rank #2.
Each of the companies will release first-quarter 2021 results on May 6.

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