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What's in Store for Copa Holdings (CPA) in Q4 Earnings?

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Copa Holdings, S.A. (CPA - Free Report) is scheduled to report fourth-quarter 2018 financial numbers on Feb 13, after the market closes.

In the last reported quarter, the carrier came up with a negative earnings surprise of 4.2%. Quarterly revenues also lagged the Zacks Consensus Estimate. While the top line inched up more than 2% year over year, the bottom line plunged significantly. Results were hurt by high fuel prices and weakening Brazilian and Argentinian currencies.

With the Zacks Consensus Estimate for fourth-quarter earnings being revised 34.2% downward in the last 90 days, the company is likely to face a similar fate this reporting cycle.

Factors at Play

Although fuel prices were at modest levels for the most part of the fourth quarter, the same appears pretty high when a year-over-year comparison is made. Evidently, the Zacks Consensus Estimate for fuel cost per gallon in the fourth quarter stands at $2.56, much higher than $2.03 reported in the year-ago quarter. The steep fuel prices are likely to affect the bottom line in the to-be-reported quarter. Additionally, currency devaluation in the Latin American economies might hamper overall results.

Moreover, the Zacks Consensus Estimate for fourth-quarter passenger revenues is pegged at $649 million, lower than the reported figure of $658 million in the year-earlier quarter. The sluggish passenger revenues might in turn, limit top-line growth.

However, the carrier’s consistent measures to reduce non-fuel unit costs are anticipated to lift results in the impending quarterly release. The consensus mark for the metric in the fourth quarter stands at 6.43 cents, lower than 6.5 cents reported in the fourth quarter of 2017.

Earnings Whispers

Per our proven model a company needs to have the right combination of the two key ingredients — a positive Earnings ESP and a favorable Zacks Rank #3 (Hold) or better — to increase the odds of an earnings beat. However, that is not the case here as highlighted below.

Earnings ESP: Copa Holdings has an Earnings ESP of -2.89% as the Most Accurate Estimate is pegged at $1.01 while the Zacks Consensus Estimate stands at $1.04. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Copa Holdings carries a Zacks Rank #2 (Buy), which increases the predictive power of ESP. However, the company’s negative ESP complicates the surprise prediction.

We caution against all Sell-rated stocks (#4 or 5) going into an earnings announcement, especially when the company is seeing negative estimate revisions.

Copa Holdings, S.A. Price and EPS Surprise


Copa Holdings, S.A. Price and EPS Surprise | Copa Holdings, S.A. Quote

Stocks to Consider

Investors interested in the broader Transportation sector can check out a few stocks worth considering like Azul SA (AZUL - Free Report) , Frontline Ltd. (FRO - Free Report) and Gol Linhas Aereas Inteligentes S.A. (GOL - Free Report) as these possess the perfect mix of elements to beat on earnings in the next releases.

Azul has an Earnings ESP of +8.16% and a Zacks Rank #1 (Strong Buy). The company will report fourth-quarter earnings numbers on Mar 14. You can see the complete list of today’s Zacks #1 Rank stocks here.

Frontline has an Earnings ESP of +4.17% and a Zacks Rank of 1. The company is scheduled to announce final-quarter financial figures on Feb 28.

Gol Linhas has an Earnings ESP of +17.07% and a Zacks Rank of 3. This company is set to release fourth-quarter results on Feb 28.

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