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Copa Holdings Up 22.6% YTD: Is the Stock Still Worth Betting on Now?

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Key Takeaways

  • CPA has surged 22.6% YTD, outperforming the airline industry and U.S. peers like UAL and DAL.
  • The company forecasts 7-8% capacity growth and a 21-23% operating margin for 2025.
  • CPA trades at 6.28X forward earnings, well below the industry average of 11.12X, signaling valuation appeal.

Shares of Latin American carrier, Copa Holdings (CPA - Free Report) , have performed well on the bourses so far this year, gaining 22.6%, outperforming the Zacks Transportation - Airline industry and its U.S. counterparts, United Airlines (UAL - Free Report) and Delta Air Lines (DAL - Free Report) . The double-digit gain in the share price of CPA against the double-digit declines of United Airlines and Delta Air Lines seems to suggest that Copa Holdings has navigated the recent tariff-induced volatility well.

YTD Price Comparison

Zacks Investment ResearchImage Source: Zacks Investment Research

Given CPA’s impressive rally, investors might wonder if the opportunity to add this high-flying stock to their portfolio has passed. However, we believe CPA has a lot going in its favor, and this rally is far from over. In fact, the stock holds substantial upside potential. CPA currently has a Momentum Score of A. Technical indicators suggest continued strong performance for CPA. The stock trades above its 50-day moving average, signaling robust upward momentum and price stability. This technical strength underscores positive market sentiment and confidence in CPA’s prospects.

50-Day Moving Average Data of CPA Stock

Zacks Investment ResearchImage Source: Zacks Investment Research

Reasons for Staying Bullish on CPA Stock

Strong Air Travel Demand: Improvement in air travel demand following the end of the pandemic and normalization of economic activities bodes well for Copa Holdings' top line. To meet the upbeat demand, CPA is boosting capacity. For 2025, CPA expects consolidated capacity to grow 7-8% year over year and operating margin is expected to be in the range of 21-23%.

Copa Holdings seems to have performed better with respect to air travel demand than its U.S. counterparts due to factors like regional economic expansion, better adaptation to market trends and focus on innovative strategies.

Impressive Earnings Surprise History: Despite the tough conditions, the airline demonstrated resilience and beat the Zacks Consensus Estimate for earnings in each of the last four quarters, with the average beat being 5.5%.

Shareholder-Friendly Approach: CPA’s shareholder-friendly approach sheds light on its financial prosperity. The airline company’s high dividend yield is a huge positive for income-seeking investors. This highlights confidence in its cash flow and prospects. Copa Holdings currently pays a quarterly dividend of $1.61 per share. Copa Holdings' liquidity position is also encouraging. The airline ended first-quarter 2025 with cash and cash equivalents of $916.3 million, much higher than the current debt level of $232.4 million. This implies that the company has sufficient cash to meet its current debt obligations.

Zacks Estimates Northbound: The Zacks Consensus Estimate for CPA’s 2025 and 2026 sales implies a year-over-year increase of 4.5% and 8.1%, respectively. The consensus mark for CPA’s 2025 EPS highlights a 14.3% year-over-year uptick. The consensus mark for 2026 EPS shows a 7.5% year-over-year increase. Moreover, EPS estimates for 2025 and 2026 have been trending northward over the past 30 days, reflecting analysts' bullishness on CPA.

Zacks Investment ResearchImage Source: Zacks Investment Research

Compelling Stock Valuation: From a valuation perspective, Copa Holdings is still trading cheaper than the industry. Going by its price/earnings ratio, the company is trading at a forward earnings multiple of 6.28, much lower than the industry average of 11.12X. The company has a Value Score of A, like its U.S. counterparts, Delta Air Lines and United Airlines.

Zacks Investment ResearchImage Source: Zacks Investment Research

CPA Still a Smart Buy for Investors

Copa Holdings is likely to continue benefiting from the strong demand for air travel. The recent signs of the easing of tariff tensions are further tailwinds for the stock. The favorable valuation picture and rising earnings and sales estimates add to its appeal.

With many positives driving the stock, CPA presents a compelling investment opportunity now. This Zacks Rank #2 (Buy) undervalued stock is an ideal candidate for addition to one’s portfolio. 

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
 


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Delta Air Lines, Inc. (DAL) - free report >>

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Copa Holdings, S.A. (CPA) - free report >>

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