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Copa Holdings (CPA) Q1 Earnings Top, Down Y/Y on Weak Revenues

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Copa Holdings, S.A.’s (CPA - Free Report) earnings of $2.11 per share beat the Zacks Consensus Estimate of $1.64. However, the bottom line declined 34.5% year over year. Downturn in some Latin American economies and lower revenues affected results.

Nevertheless, the massive earnings beat seems to have pleased investors. Consequently, the stock gained more than 8% in after-hours trading on May 8.

Quarterly revenues declined nearly 6% year over year to $672.2 million and also marginally missed the Zacks Consensus Estimate of $672.3 million. This downside was due to a 6.6% decrease in passenger revenues.

Operational Statistics

While passenger unit revenue per available seat mile (PRASM) fell 8.4%, yield per passenger mile was down 8.8%. On a consolidated basis, traffic (measured in revenue passenger miles or RPMs) rose 2.3% and capacity (or available seat miles/ASMs) inched up 1.9% in the reported quarter. As traffic growth outpaced capacity expansion, consolidated load factor improved 40 basis points (bps) to 83.3%.

Additionally, unit revenue per available seat mile (RASM) deteriorated 7.7%. Adjusted operating cost per available seat mile (CASM) decreased 3.2% in the reported quarter owing to better cost management. The metric excluding fuel costs dipped 2.9%. With oil prices at modest levels during the first quarter, average fuel price per gallon decreased 3.5% year over year to $2.09.

Copa Holdings, S.A. Price, Consensus and EPS Surprise

 

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


Liquidity

The company exited the first quarter with cash and cash equivalents of $212.27 million compared with $156.16 million at the end of 2018. Long-term debt amounted to $1.04 billion compared with $975.28 million at the end of last December.

Dividend Update

The company’s board has cleared a quarterly cash dividend of 65 cents per share, payable Jun 14, 2019 to shareholders of record as of May 31.

2019 Outlook

For the full year, Copa Holdings anticipates capacity to increase approximately 1%. Additionally, operating margin is projected in the 12-14% range year over year compared with 13% achieved in 2018. Effective price per gallon of jet fuel is estimated at $2.25 in the current year.

Zacks Rank & Key Picks

Copa Holdings carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader Transportation sector are SkyWest, Inc. (SKYW - Free Report) , Swire Pacific Ltd. (SWRAY - Free Report) and GATX Corporation (GATX - Free Report) . While SkyWest and Swire Pacific sport a Zacks Rank #1 (Strong Buy), GATX carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

While shares of SkyWest and GATX have gained more than 5% each in a year’s time, the Swire Pacific stock has rallied more than 24%.

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