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Why Copa Holdings (CPA) Deserves a Place in Your Portfolio?
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Copa Holdings (CPA - Free Report) is gaining from an uptick in air-travel demand (particularly on the leisure front). The upsurge in passenger volumes makes the CPA stock an interesting investment opportunity.
Let’s delve deep to unearth the factors working in favor of the Zacks Rank #1 (Strong Buy) stock.
Northward Earnings Estimates: The Zacks Consensus Estimate for current-quarter and current-year earnings have been revised 6.1% and 10% upward, over the past 60 days, respectively. Such favorable estimate revisions reflect brokers’ confidence in the stock.
Given the wealth of information at the brokers’ disposal, it is in the best interest of investors to be guided by their expert advice and the direction of their estimate revisions. This is because it serves as a key indicator in determining the price of a stock.
Upbeat Air-travel Demand & Focus on Cargo Unit: Improved air-travel demand is aiding Copa Holdings' top-line performance. In fourth-quarter 2022, revenues of $890.6 million beat the Zacks Consensus Estimate of $883.8 million and improved year over year on the back of passenger revenues. Passenger revenues (contributed 95.6% to the top line) increased 29.5%, owing to higher yields (up 12.1%).
Continuing the upbeat trend, CPA reported 9.5% increase in traffic in March 2023 from March 2019 levels. Capacity expanded 4.6% in March. With traffic growth outpacing capacity expansion, load factor (% of seats filled by passengers) in March improved to 87.2% from 83.3% in March 2019.
We are encouraged by CPA's focus on its cargo segment. In fourth-quarter 2022, cargo and mail revenues grew 69% to $27.09 million, owing to higher cargo volumes and yields.
Upbeat Price Performance: Driven by the rosy air-travel demand scenario, shares of CPA have increased 21.7% in the past six months compared with its industry’s appreciation of 9.1%.
Image Source: Zacks Investment Research
Bullish Industry Rank: The industry, to which CPA belongs, currently has a Zacks Industry Rank of 32 (of 250 plus groups). Such a solid rank places the company in the top 13% of the Zacks industries. Studies show that 50% of a stock price movement is directly tied to the performance of the industry group that it hails from.
In fact, an ordinary stock in a strong group is likely to outperform a robust stock in a weak industry. Therefore, taking the industry’s performance into consideration becomes imperative.
American Airlines is benefiting from the improved air-travel-demand situation. In the fourth quarter of 2022, AAL reported earnings of $1.17 per share, surpassing the Zacks Consensus Estimate by 2.63%.
For first-quarter and full-year 2023, AAL’s earnings are expected to register 101.3% and 410% growth, respectively, on a year-over-year basis.
Based in Chicago, United Airlines is also gaining from gradual increase in air-travel demand (particularly for leisure). However, high fuel costs are affecting its bottom line.
Over the past 60 days, the UAL stock has seen the Zacks Consensus Estimate for 2023 earnings being revised 3.8% upward. United Airlines surpassed the Zacks Consensus Estimate for earnings in two of the last four quarters (missed twice), the average beat being 5.42%.
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Why Copa Holdings (CPA) Deserves a Place in Your Portfolio?
Copa Holdings (CPA - Free Report) is gaining from an uptick in air-travel demand (particularly on the leisure front). The upsurge in passenger volumes makes the CPA stock an interesting investment opportunity.
Let’s delve deep to unearth the factors working in favor of the Zacks Rank #1 (Strong Buy) stock.
Northward Earnings Estimates: The Zacks Consensus Estimate for current-quarter and current-year earnings have been revised 6.1% and 10% upward, over the past 60 days, respectively. Such favorable estimate revisions reflect brokers’ confidence in the stock.
Given the wealth of information at the brokers’ disposal, it is in the best interest of investors to be guided by their expert advice and the direction of their estimate revisions. This is because it serves as a key indicator in determining the price of a stock.
Upbeat Air-travel Demand & Focus on Cargo Unit: Improved air-travel demand is aiding Copa Holdings' top-line performance. In fourth-quarter 2022, revenues of $890.6 million beat the Zacks Consensus Estimate of $883.8 million and improved year over year on the back of passenger revenues. Passenger revenues (contributed 95.6% to the top line) increased 29.5%, owing to higher yields (up 12.1%).
Continuing the upbeat trend, CPA reported 9.5% increase in traffic in March 2023 from March 2019 levels. Capacity expanded 4.6% in March. With traffic growth outpacing capacity expansion, load factor (% of seats filled by passengers) in March improved to 87.2% from 83.3% in March 2019.
We are encouraged by CPA's focus on its cargo segment. In fourth-quarter 2022, cargo and mail revenues grew 69% to $27.09 million, owing to higher cargo volumes and yields.
Upbeat Price Performance: Driven by the rosy air-travel demand scenario, shares of CPA have increased 21.7% in the past six months compared with its industry’s appreciation of 9.1%.
Image Source: Zacks Investment Research
Bullish Industry Rank: The industry, to which CPA belongs, currently has a Zacks Industry Rank of 32 (of 250 plus groups). Such a solid rank places the company in the top 13% of the Zacks industries. Studies show that 50% of a stock price movement is directly tied to the performance of the industry group that it hails from.
In fact, an ordinary stock in a strong group is likely to outperform a robust stock in a weak industry. Therefore, taking the industry’s performance into consideration becomes imperative.
Other Stocks to Consider
Investors interested in the Zacks Airline industry may also consider stocks like American Airlines (AAL - Free Report) and United Airlines (UAL - Free Report) , each carrying a Zacks Rank #2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
American Airlines is benefiting from the improved air-travel-demand situation. In the fourth quarter of 2022, AAL reported earnings of $1.17 per share, surpassing the Zacks Consensus Estimate by 2.63%.
For first-quarter and full-year 2023, AAL’s earnings are expected to register 101.3% and 410% growth, respectively, on a year-over-year basis.
Based in Chicago, United Airlines is also gaining from gradual increase in air-travel demand (particularly for leisure). However, high fuel costs are affecting its bottom line.
Over the past 60 days, the UAL stock has seen the Zacks Consensus Estimate for 2023 earnings being revised 3.8% upward. United Airlines surpassed the Zacks Consensus Estimate for earnings in two of the last four quarters (missed twice), the average beat being 5.42%.