Azul S.A. (AZUL - Free Report) posted impressive traffic numbers for February 2019. Load factor (percentage of seats filled by passengers) improved as traffic growth outpaced capacity expansion.
Consolidated traffic (measured in revenue passenger kilometers or RPKs) improved 18.4% year over year to 2.1 billion on 24.4% growth on the domestic front and 1.3% rise on the international front. On a year-over-year basis, consolidated capacity (or available seat kilometers/ASKs) expanded 16.9% to 2.6 billion, owing to 20.1% rise in domestic capacity and 7.4% growth in international capacity.
Notably, consolidated load factor expanded 1 percentage point (pp) to 81.1%. Also, load factor on the domestic front increased to 82.1% from 79.2% in the year-ago period. However, load factor on the international front slipped to 78% from 82.7% a year ago.
Apart from the traffic report, we are impressed by the carrier’s fleet modernization efforts. The company operates a young fleet with an average age of 5.6 years. The planes are more fuel-efficient and have lower maintenance costs. Such efforts are expected to improve operational efficiency by lowering costs and generating higher revenues in fourth-quarter 2018 results. Detailed results are expected to be released on Mar 14. Also, strong demand for air travel is immensely aiding the company, which has led to robust passenger revenues and expected to boost the top line in the final quarter of 2018 as well.
Shares of Azul have performed impressively in the past three months. The stock has gained 19.7%, against the industry’s decline of 0.1%.
The impressive traffic report has further boosted the stock.
Zacks Rank & Other Stocks to Consider
Azul currently sports a Zacks Rank #1 (Strong Buy).
Investors interested in the Zacks Transportation Sector may also consider SkyWest, Inc. (SKYW - Free Report) , Herc Holdings Inc. (HRI - Free Report) and Expeditors International of Washington, Inc. (EXPD - Free Report) , each sporting a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
All the three stocks boast an impressive earnings surprise history. SkyWest outpaced the Zacks Consensus Estimate in each of the trailing four quarters, the average being 16.9%. Herc Holdings outpaced the consensus mark in three of the trailing four quarters, the average being 3.3%. Expeditors outpaced the consensus mark in each of the trailing four quarters, the average being 14.5%.
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