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Gol Linhas (GOL) Rides on Air-Travel Demand, Fuel Costs Ail
Gol Linhas (GOL - Free Report) is benefiting from the uptick in air-travel demand (particularly on the domestic front). The improvement in air-travel demand in Brazil is a huge boon for Gol Linhas, which currently carries a Zacks Rank #3 (Hold). In the second quarter of 2022, revenues from passenger transportation, which accounted for 92.4% of total revenues, surged 237.5% year over year.
Continuing this favorable trend, Gol Linhas’ consolidated traffic in September increased 41.4% year over year. To match the increased demand situation, GOL is expanding its capacity. In the same month, capacity grew 36.9% year over year. Since traffic growth was more than capacity expansion, the load factor improved 2.6 percentage points to 81.7% last month.
The upbeat traffic in its domestic markets is leading to a rosy scenario on a consolidated basis. In September, domestic traffic and capacity improved 27% and 23%, respectively. On the domestic front, 27.9% more passengers boarded GOL’s flights in September 2022.
On the flip side, rising fuel costs pose a threat to Gol Linhas’ bottom line. The average fuel price per liter increased 80.5% year over year in the second quarter. Primarily due to a significant increase in fuel costs, total operating expenses surged 86.8% year over year. With oil prices moving north, the forecast for current-year fuel price per liter has been raised. The metric is now predicted to be R$5.7 in 2022 (earlier expectation was R$4.3).
Stocks to Consider
Some better-ranked stocks from the broader Zacks Transportation sector are ZTO Express (ZTO - Free Report) , Air Lease Corporation (AL - Free Report) and Teekay Tankers Ltd. (TNK - Free Report) , each currently carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
ZTO Express has an expected earnings growth rate of 22.9% for the current year. ZTO delivered a trailing four-quarter earnings surprise of 8.9%, on average.
The Zacks Consensus Estimate for ZTO’s current-year earnings has improved 4.4% over the past 90 days. Shares of ZTO have lost 19.6% over the past year.
Air Lease has a long-term expected growth rate of 16.9%. AL delivered a trailing four-quarter earnings surprise of 29.2%, on average.
Shares of AL have lost 20.8% over the past year.
Teekay Tankers has an expected earnings growth rate of 172.86% for the current year. TNK delivered a trailing four-quarter earnings surprise of 46.1%, on average. Teekay Tankers has a long-term expected growth rate of 3%.
The Zacks Consensus Estimate for TNK’s current-year earnings has improved more than 100% over the past 90 days. Shares of TNK have soared 88.3% over the past year.