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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 2019 financial numbers on Feb 12, after market close.

The Zacks Consensus Estimate for fourth-quarter 2019 earnings has been revised upward 1.5% in the past 90 days. Considering this, let’s delve into the factors that might have influenced the company’s performance in the quarter under review.

Copa Holdings currently has six Boeing MAX 9 jets in its fleet. Multiple flight cancellations, due to the grounding of the jets7, are likely to have dented the carrier’s performance in the final quarter of 2019. Notably, the grounding is likely to have resulted in capacity reduction. The Zacks Consensus Estimate for fourth-quarter available seat miles (a measure of capacity) is currently pegged at 6,161 million, reflecting 3.5% sequential decline.

Moreover, due to lower capacity non-fuel unit costs are likely to have increased in the December-end quarter. Copa’s bottom-line number is likely to reflect the negative impact of increased non-fuel unit costs. Evidently, the Zacks Consensus Estimate for the metric indicates 4.8% sequential increase. Additionally, currency devaluation in the Latin American economies might have hampered overall results.

Copa Holdings, S.A. Price and EPS Surprise


Copa Holdings, S.A. Price and EPS Surprise

Copa Holdings, S.A. price-eps-surprise | Copa Holdings, S.A. Quote


Passenger revenues, which contribute a significant chunk to the top line, are likely to have increased owing to impressive demand for air travel in the October-December period. Evidently, the Zacks Consensus Estimate for passenger revenues indicates 2.1% year over year improvement. Moreover, total revenue per available seat miles (RASM: a measure of unit revenue) is likely to have improved in the fourth quarter on higher passenger revenues. The Zacks Consensus Estimate for fourth-quarter RASM is currently pegged at 10.9 cents, reflecting 6.9% year-over-year improvement. Additionally, moderate fuel costs are likely to have supported bottom-line growth in the to-be-reported quarter.

What Does the Zacks Model Say?

The proven Zacks model does not conclusively predict an earnings beat for Copa Holdings this time around. This is because a stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. However, that is not the case here as elaborated below. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Earnings ESP: Copa Holdings has an Earnings ESP of 0.00% as the Most Accurate Estimate is pegged at $1.98, in line with the Zacks Consensus Estimate. 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, currently.

Highlights of Q3 Earnings

Copa Holdings’ earnings of $2.45 per share surpassed the Zacks Consensus Estimate by 14 cents. Moreover, the bottom line soared 80.2% year over year on higher revenues and low fuel costs. Quarterly revenues also increased 5.3% to $708.2 million, above the Zacks Consensus Estimate of $701 million.

Stocks to Consider

Investors may consider Navios Maritime Partners L.P. NMM, Arista Networks ANET and Altice USA ATUS as these stocks possess the right combination of elements to come up with earnings beats in their next releases.

Navios Maritime is a Zacks #3 Ranked stock and has an Earnings ESP of +20.6%. The company is slated to report fourth-quarter figures on Feb 10.

Arista Networks has an Earnings ESP of +2.72% and currently holds a Zacks Rank of 2. The company will release fourth-quarter earnings numbers on Feb 13.

Altice has an Earnings ESP of +11.11% and currently carries a Zacks Rank of 3. The company will release quarterly numbers on Feb 12.

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