Copa Holdings (CPA - Free Report) is performing impressively at the moment. Also, we are optimistic on the company’s prospects and believe that the time is right for investors to add the stock to their portfolio as it looks promising and is poised to carry the momentum ahead.
Let’s take a look into the factors that make this Zacks Rank #1 (Strong Buy) stock a compelling choice for investors right now. You can see the complete list of today’s Zacks #1 Rank stocks here.
An Outperformer: Copa Holdings has outperformed its industry on a year-to-date basis. The stock has gained 27.1% against the industry’s 0.8% decline.
Earnings Estimates Moving Up: Annual estimates for Copa Holdings have been northward bound over the past 60 days, reflecting analysts’ confidence in the stock. Over this period, the Zacks Consensus Estimate for current-year earnings climbed 13.4% to $6.86. For 2020, the same moved up 14.7% to $9.52 over the same time frame.
Given the wealth of information at their disposal, it is in the best interest of investors to be guided by broker advice and the direction of their estimate revisions. This is because the direction of estimate revisions serves as an important pointer when it comes to the price of a stock.
Solid Growth Prospects: The Zacks Consensus Estimate for Copa Holdings’ current-year earnings indicates a 20.6% improvement year over year, higher than the industry average of 10.2%. In 2020, the bottom line is anticipated to register 21.1% growth compared with 19.7% increase expected for the industry. The stock also has expected earnings per share growth rate of 15.9% for three to five years.
The scenario is bullish with respect to revenues as well. For 2019, the Zacks Consensus Estimate for the company’s top line stands at $2.71 billion, implying 1.3% growth year over year. For 2020, the average forecast is pinned at $2.95 billion, reflecting an 8.9% improvement year over year.
Decent Earnings Surprise History: Copa Holdings, which competes with the likes of GOL Linhas (GOL - Free Report) , Azul AZUL and LATAM Airlines (LTM - Free Report) in the Latin American aviation space, has an impressive earnings surprise history. The company has outpaced the Zacks Consensus Estimate in two of the trailing four quarters, the average earnings beat being 9.2%.
Upbeat 2019 Outlook: Driven by modest fuel prices and bullish revenue trends, Copa Holdings expects 2019 operating margin in the 15-17% range. This compares favorably with 13% operating margin expansion last year. Meanwhile, effective price per gallon of jet fuel is predicted at $2.15 compared with $2.25 anticipated earlier.
Bullish Industry Rank: The industry, to which Copa Holdings belongs, currently has a Zacks Industry Rank of 30 out of 250 plus groups (top 12%). Studies have shown that 50% of a stock's price movement is directly related to the performance of the industry group that it is in.
In fact, an average stock in a strong group is likely to outperform a great stock in a poor industry. Therefore, taking the industry’s performance into account becomes necessary.
Style Scores: In addition to a top Zacks Rank and favorable industry rank, the stock has a Momentum Score of B and VGM Score of B.
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