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Investors Should Retain Gol Linhas (GOL) Stock Now: Here's Why
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The uptick in air-travel demand in Latin America, following widespread vaccination programs, bodes well for Gol Linhas Aéreas Inteligentes . However, escalated fuel costs are limiting the bottom-line growth and emerge as a key downside.
Factors Favoring GOL
The gradual improvement in air-travel demand in Brazil is a huge boon for Gol Linhas, a Zacks Rank #3 (Hold) company presently. Upbeat air-travel demand is boosting GOL’s traffic.
Evidently, consolidated traffic for November increased 28.5% year over year. To match the increased demand situation, the company is expanding its capacity. During the same month, capacity grew 29.7% year over year. GOL carried 26% more passengers in November from the year-ago levels.
Upbeat traffic in its domestic markets is leading to the rosy scenario on a consolidated basis. In November, domestic traffic and capacity improved 18.7% and 19.6%, respectively. On the domestic front, 21.7% more passengers boarded GOL’s flights in November 2022.
With improving air-travel demand, Gol Linas’ acquisition of domestic airline MAP Transportes Aéreos Ltd, a Brazilian domestic airline, for R$28 million is a prudent move. The acquisition is likely to boost Gol's top line by attracting additional traffic.
The Zacks Consensus Estimate for 2022 has narrowed to a loss of $1.29 per share from $1.77 per share, 90 days ago. Also, Gol Linhas currently has a Growth Style Score of A.
Key Risks
Escalating fuel prices pose a threat to Gol Linhas’ bottom line. Average fuel price per liter increased 91.3% year over year in the third quarter of 2022. Primarily due to a significant increase in fuel costs, total operating expenses surged 48.8% year over year. Fuel price per liter is predicted to be R$5.9 in 2022.
GOL’s liquidity position is bothersome as well. At the end of the third quarter of 2022, Gol Linhas’ current ratio (a measure of liquidity) was pegged at 0.23. A current ratio of less than 1 (current liabilities exceeding current assets) is not desirable as it indicates that the company may have problems meeting its short-term obligations.
Key Picks
Investors interested in the broader Transportation sector may consider the following stocks:
Covenant Logistics (CVLG - Free Report) : CVLG offers a portfolio of transportation and logistics services, including asset-based expedited, dedicated and irregular route truckload capacity, besides asset-light warehousing, transportation management and freight brokerage capability.
The gradually improving freight market scenario is a tailwind to Covenant. CVLG’s cost-control efforts are appreciated as well. CVLG currently sports a Zacks Rank #1. The stock has witnessed the Zacks Consensus Estimate for 2022 earnings being revised 10.1% upward over the past 60 days.
Teekay Tankers (TNK - Free Report) : TNK is being well-served by the increase in tanker rates. A gradual ramp-up in economic activities also bodes well. High fuel costs are, however, weighing on the bottom line.
Teekay Tankers currently sports a Zacks Rank #1. TNK’s shares have soared 180.2% in a year’s time. Over the past 60 days, the Zacks Consensus Estimate for 2022 earnings has moved 57.7% north.
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Investors Should Retain Gol Linhas (GOL) Stock Now: Here's Why
The uptick in air-travel demand in Latin America, following widespread vaccination programs, bodes well for Gol Linhas Aéreas Inteligentes . However, escalated fuel costs are limiting the bottom-line growth and emerge as a key downside.
Factors Favoring GOL
The gradual improvement in air-travel demand in Brazil is a huge boon for Gol Linhas, a Zacks Rank #3 (Hold) company presently. Upbeat air-travel demand is boosting GOL’s traffic.
Evidently, consolidated traffic for November increased 28.5% year over year. To match the increased demand situation, the company is expanding its capacity. During the same month, capacity grew 29.7% year over year. GOL carried 26% more passengers in November from the year-ago levels.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Upbeat traffic in its domestic markets is leading to the rosy scenario on a consolidated basis. In November, domestic traffic and capacity improved 18.7% and 19.6%, respectively. On the domestic front, 21.7% more passengers boarded GOL’s flights in November 2022.
With improving air-travel demand, Gol Linas’ acquisition of domestic airline MAP Transportes Aéreos Ltd, a Brazilian domestic airline, for R$28 million is a prudent move. The acquisition is likely to boost Gol's top line by attracting additional traffic.
The Zacks Consensus Estimate for 2022 has narrowed to a loss of $1.29 per share from $1.77 per share, 90 days ago. Also, Gol Linhas currently has a Growth Style Score of A.
Key Risks
Escalating fuel prices pose a threat to Gol Linhas’ bottom line. Average fuel price per liter increased 91.3% year over year in the third quarter of 2022. Primarily due to a significant increase in fuel costs, total operating expenses surged 48.8% year over year. Fuel price per liter is predicted to be R$5.9 in 2022.
GOL’s liquidity position is bothersome as well. At the end of the third quarter of 2022, Gol Linhas’ current ratio (a measure of liquidity) was pegged at 0.23. A current ratio of less than 1 (current liabilities exceeding current assets) is not desirable as it indicates that the company may have problems meeting its short-term obligations.
Key Picks
Investors interested in the broader Transportation sector may consider the following stocks:
Covenant Logistics (CVLG - Free Report) : CVLG offers a portfolio of transportation and logistics services, including asset-based expedited, dedicated and irregular route truckload capacity, besides asset-light warehousing, transportation management and freight brokerage capability.
The gradually improving freight market scenario is a tailwind to Covenant. CVLG’s cost-control efforts are appreciated as well. CVLG currently sports a Zacks Rank #1. The stock has witnessed the Zacks Consensus Estimate for 2022 earnings being revised 10.1% upward over the past 60 days.
Teekay Tankers (TNK - Free Report) : TNK is being well-served by the increase in tanker rates. A gradual ramp-up in economic activities also bodes well. High fuel costs are, however, weighing on the bottom line.
Teekay Tankers currently sports a Zacks Rank #1. TNK’s shares have soared 180.2% in a year’s time. Over the past 60 days, the Zacks Consensus Estimate for 2022 earnings has moved 57.7% north.