We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
LATAM Airlines EPS Estimates Southbound: Should You Avoid the Stock?
Read MoreHide Full Article
Key Takeaways
LTM grapples with currency issues, fuel costs and capacity expansion across its Latin American operations.
LATAM Airlines recorded $33 million in second-quarter foreign exchange losses amid currency movements.
LTM's aircraft fuel costs surged 93.1% to $1.71 billion, while adjusted operating margin fell to 5.4%.
LATAM Airlines Group (LTM - Free Report) is currently mired in multiple headwinds, which, we believe, have made it an unimpressive investment option. The negative sentiment surrounding LATAM Airlines’ stock is evident from the fact that the Zacks Consensus Estimate for the third quarter of 2026 and the fourth quarter of 2026 earnings has been revised downward in the past 60 days. The consensus mark for 2026 and 2027 earnings has also been projected downward in the same time frame.
The unfavorable estimate revisions indicate brokers’ lack of confidence in the stock.
Image Source: Zacks Investment Research
Given this backdrop, the question now arises whether it is worth buying, holding, or selling the LATAM Airlines stock at current prices. Let us delve deeper to find out.
Headwinds Continue to Bother LTM Stock
LATAM Airlines’ operations across several Latin American markets expose it to currency movements against the U.S. dollar functional currency. Brazil reflects the group’s largest operational cash flow exposure, while the euro, British pound and other Latin American currencies also create risk. In the second quarter, LATAM Airlines recorded $33 million of foreign exchange losses, mainly due to the appreciation of local currencies compared with March 2026 and increased dollar-denominated costs. The company had hedged 64% of its estimated Brazilian real cash flow mismatch for the third quarter and 42% for the fourth quarter, but currency volatility can still affect costs and profitability.
Elevated fuel prices (all thanks to the ongoing tensions between the United States and Iran) have been weighing on the bottom-line growth of all airline companies, and it is no different for LTM. LATAM Airlines’ second-quarter aircraft fuel costs increased 93.1% year over year to $1.71 billion as the average all-in fuel price, including hedges, rose 81.3% to $194.50 per barrel. Adjusted operating margin consequently fell to 5.4% from 12.9%. Management’s updated outlook assumes lower fuel prices in the second half, but continued volatility could again weigh on profitability despite hedging and fare actions.
LATAM Airlines retains a broad network in Latin America, but continued capacity expansion raises the importance of maintaining pricing discipline and load factors.
LATAM Airlines’ Price Performance
Shares of LATAM Airlines have gained 16.3% in the past year, outperforming the Zacks Airline industry’s 6.3% growth, as well as that of other industry players, Ryanair Holdings (RYAAY - Free Report) and Copa Holdings (CPA - Free Report) within the same time frame.
LTM Stock’s One-Year Price Comparison
Image Source: Zacks Investment Research
Unattractive Valuation Picture for LTM Stock
LATAM Airlines looks expensive from a valuation standpoint. Considering the forward 12-month price-to-sales ratio (P/S-F12M), the company is trading at a premium compared to the industry.
The stock has a forward 12-month P/S-F12M of 0.83X compared with 0.52X for the industry over the past five years. These factors indicate that the stock’s valuation is unattractive.
LTM P/S Ratio (Forward 12 Months) Vs. Industry
Image Source: Zacks Investment Research
Time to Get Rid of LATAM Airlines
Elevated fuel costs remain a major earnings risk, while foreign exchange exposure and intense competition can constrain margins. Load factors also softened as capacity grew faster than traffic. Although management raised its 2026 EBITDA outlook, near-term earnings estimates have moved lower. Collectively, the aforesaid factors diminish LTM’s appeal as an investment at this juncture.
The negativity surrounding the stock outweighs the positives like the upbeat traffic scenario, fleet expansion efforts, diversified passenger, cargo and loyalty businesses, disciplined capacity management and healthy liquidity supporting earnings resilience. So, the stock appears to be a risky bet for investors. The stock’s current Zacks Rank #4 (Sell) justifies our analysis.
View the Zacks #1 Rank List
Image: Bigstock
LATAM Airlines EPS Estimates Southbound: Should You Avoid the Stock?
Key Takeaways
LATAM Airlines Group (LTM - Free Report) is currently mired in multiple headwinds, which, we believe, have made it an unimpressive investment option. The negative sentiment surrounding LATAM Airlines’ stock is evident from the fact that the Zacks Consensus Estimate for the third quarter of 2026 and the fourth quarter of 2026 earnings has been revised downward in the past 60 days. The consensus mark for 2026 and 2027 earnings has also been projected downward in the same time frame.
The unfavorable estimate revisions indicate brokers’ lack of confidence in the stock.
Given this backdrop, the question now arises whether it is worth buying, holding, or selling the LATAM Airlines stock at current prices. Let us delve deeper to find out.
Headwinds Continue to Bother LTM Stock
LATAM Airlines’ operations across several Latin American markets expose it to currency movements against the U.S. dollar functional currency. Brazil reflects the group’s largest operational cash flow exposure, while the euro, British pound and other Latin American currencies also create risk. In the second quarter, LATAM Airlines recorded $33 million of foreign exchange losses, mainly due to the appreciation of local currencies compared with March 2026 and increased dollar-denominated costs. The company had hedged 64% of its estimated Brazilian real cash flow mismatch for the third quarter and 42% for the fourth quarter, but currency volatility can still affect costs and profitability.
Elevated fuel prices (all thanks to the ongoing tensions between the United States and Iran) have been weighing on the bottom-line growth of all airline companies, and it is no different for LTM. LATAM Airlines’ second-quarter aircraft fuel costs increased 93.1% year over year to $1.71 billion as the average all-in fuel price, including hedges, rose 81.3% to $194.50 per barrel. Adjusted operating margin consequently fell to 5.4% from 12.9%. Management’s updated outlook assumes lower fuel prices in the second half, but continued volatility could again weigh on profitability despite hedging and fare actions.
LATAM Airlines retains a broad network in Latin America, but continued capacity expansion raises the importance of maintaining pricing discipline and load factors.
LATAM Airlines’ Price Performance
Shares of LATAM Airlines have gained 16.3% in the past year, outperforming the Zacks Airline industry’s 6.3% growth, as well as that of other industry players, Ryanair Holdings (RYAAY - Free Report) and Copa Holdings (CPA - Free Report) within the same time frame.
LTM Stock’s One-Year Price Comparison
Unattractive Valuation Picture for LTM Stock
LATAM Airlines looks expensive from a valuation standpoint. Considering the forward 12-month price-to-sales ratio (P/S-F12M), the company is trading at a premium compared to the industry.
The stock has a forward 12-month P/S-F12M of 0.83X compared with 0.52X for the industry over the past five years. These factors indicate that the stock’s valuation is unattractive.
LTM P/S Ratio (Forward 12 Months) Vs. Industry
Time to Get Rid of LATAM Airlines
Elevated fuel costs remain a major earnings risk, while foreign exchange exposure and intense competition can constrain margins. Load factors also softened as capacity grew faster than traffic. Although management raised its 2026 EBITDA outlook, near-term earnings estimates have moved lower. Collectively, the aforesaid factors diminish LTM’s appeal as an investment at this juncture.
The negativity surrounding the stock outweighs the positives like the upbeat traffic scenario, fleet expansion efforts, diversified passenger, cargo and loyalty businesses, disciplined capacity management and healthy liquidity supporting earnings resilience. So, the stock appears to be a risky bet for investors. The stock’s current Zacks Rank #4 (Sell) justifies our analysis.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.