Back to top

Image: Bigstock

What's in the Cards for Azul (AZUL) This Earnings Season?

Read MoreHide Full Article

Azul S.A.(AZUL - Free Report) is slated to report second-quarter 2021 financial numbers on Aug 12.

Azul has a disappointing earnings record. The carrier’s bottom line underperformed the Zacks Consensus Estimate in all of the last four quarters. It has a trailing four-quarter negative earnings surprise of 74.7%, on average.
Moreover, the Zacks Consensus Estimate for the to-be-reported quarter’s bottom line is currently pegged at a loss of $1.43, which suggests deterioration from a loss of $1.38 per share, 60 days ago.

Against this backdrop, let’s discuss the factors that are likely to get reflected in the upcoming quarterly results.

AZUL SA Price and EPS Surprise

 

AZUL SA Price and EPS Surprise

AZUL SA price-eps-surprise | AZUL SA Quote

 

Even though, air-travel demand is gradually improving in Brazil with increased vaccinations and easing coronavirus-induced restrictions, it is still below pre-coronavirus levels. Passenger revenues, which account for the bulk of the company’s top line, are likely to have been soft in the quarter to be reported. This is likely to have hurt the top line. Load factor (% of seats filled by passengers) is also expected to have declined.

Azul recorded a non-cash foreign currency loss of R$1.6 billion in first-quarter 2021, primarily due to 9.6% depreciation of the Brazilian real against U.S. dollar. Evidently, depreciation of the Brazilian currency might have negatively impacted the company’s second-quarter performance as well.

However, strong e-commerce growth leading to rise in cargo revenues is likely to have driven Azul’s top-line numbers.

What Does the Zacks Model Say?

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

Earnings ESP: Azul has an Earnings ESP of -15.65%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Azul carries a Zacks Rank #3, currently.

Highlights of Q1

Azul incurred a loss (excluding $2.44 from non-recurring items) of $1.78 per share, which was wider than the Zacks Consensus Estimate of a loss of $1.64. In the year-ago quarter, the company reported adjusted loss of $1.63 per share. However, total revenues of $334 million missed the Zacks Consensus Estimate of $341.3 million. The top line fell 47.2% on a year-over-year basis.

Sectorial Snapshots

Let’s look into some of the other recently-released earnings reports from companies within the Zacks Transportation  sector.

Knight-Swift Transportation Holdings (KNX - Free Report) , carrying a Zacks Rank #2, reported second-quarter 2021 earnings (excluding 6 cents from non-recurring items) of 98 cents per share, surpassing the Zacks Consensus Estimate of 87 cents. Total revenues of $1,315.7 million also outperformed the Zacks Consensus Estimate of $1,300.8 million.

SkyWest (SKYW - Free Report) , currently flaunting a Zacks Rank #1, reported second-quarter 2021 earnings of $1.22 per share, beating the Zacks Consensus Estimate of 28 cents. The figure improved from the year-ago quarter’s loss of 51 cents. Revenues in the June quarter summed $657 million, not only surpassing the Zacks Consensus Estimate of $581.5 million as well as surging 87.7% year over year.

United Parcel Service (UPS - Free Report) , currently carrying a Zacks Rank #3, reported second-quarter 2021 earnings (excluding a penny from non-recurring items) of $3.06 per share, beating the Zacks Consensus Estimate of $2.75. Quarterly revenues of $23,424 million also outperformed the Zacks Consensus Estimate of $23,085.4 million.