Copa Holdings, S.A. (CPA) reported traffic numbers for February 2025 on the back of upbeat air-travel demand. Driven by high passenger volumes, revenue passenger miles (a measure of traffic) improved on a year-over-year basis in February.To match the demand swell, CPA is increasing its capacity. In February, available seat miles (a measure of capacity) increased 1.7% year over year. Revenue passenger miles increased 2.3% year over year. Since traffic outpaced capacity expansion, the load factor (percentage ...

It has been about a month since the last earnings report for Copa Holdings (CPA) . Shares have lost about 3% in that time frame, outperforming the S&P 500.Will the recent negative trend continue leading up to its next earnings release, or is Copa Holdings due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.How Have Estimates Been Moving Since Then?It tur ...

Core Insights - Copa Holdings, S.A. reported preliminary passenger traffic statistics for February 2025, showing an increase in both capacity and passenger traffic compared to February 2024 [1][2]. Group 1: Operating Data - Available Seat Miles (ASM) for February 2025 were 2,389.9 million, a 1.7% increase from 2,348.8 million in February 2024 [1][2]. - Revenue Passenger Miles (RPM) for February 2025 were 2,072.0 million, reflecting a 2.3% increase from 2,025.8 million in February 2024 [1][2]. - The load factor for February 2025 was 86.7%, which is 0.4 percentage points higher than the 86.3% recorded in February 2024 [1][2]. Group 2: Company Overview - Copa Holdings is a prominent provider of passenger and cargo services in Latin America, operating in North, Central, and South America, as well as the Caribbean [3].

Core Insights - Zacks Premium provides various tools for investors to enhance their stock market strategies, including daily updates on Zacks Rank and Industry Rank, Equity Research reports, and Premium stock screens [1] - The Zacks Style Scores serve as complementary indicators to the Zacks Rank, helping investors identify stocks with the highest potential to outperform the market in the short term [2] Zacks Style Scores Overview - Stocks are rated from A to F based on their value, growth, and momentum characteristics, with A being the highest score indicating a better chance of outperforming the market [3] - The Style Scores are categorized into four types: Value Score, Growth Score, Momentum Score, and VGM Score, each focusing on different investment strategies [3][4][5][6] Value Score - The Value Score targets value investors by identifying stocks trading below their true value using various financial ratios such as P/E, PEG, and Price/Sales [3] Growth Score - The Growth Score focuses on a company's future prospects, analyzing projected and historical earnings, sales, and cash flow to find stocks with sustainable growth potential [4] Momentum Score - The Momentum Score helps investors capitalize on price trends, utilizing factors like short-term price changes and earnings estimate revisions to identify optimal entry points [5] VGM Score - The VGM Score combines the three Style Scores to provide a comprehensive rating, helping investors find stocks with attractive value, strong growth forecasts, and positive momentum [6] Zacks Rank Integration - The Zacks Rank, a proprietary stock-rating model, uses earnings estimate revisions to simplify portfolio building, with 1 (Strong Buy) stocks historically yielding an average annual return of +25.41% since 1988 [7][8] - Investors are encouraged to select stocks with a Zacks Rank of 1 or 2 and Style Scores of A or B for the highest likelihood of success [9] Stock Example: Copa Holdings - Copa Holdings, based in Panama City, operates Copa Airlines and Copa Colombia, and currently holds a 3 (Hold) rating on the Zacks Rank with a VGM Score of A [11] - The company has a Value Style Score of A, supported by a forward P/E ratio of 6.33, making it attractive for value investors [12] - Recent upward revisions in earnings estimates and a Zacks Consensus Estimate of $15.48 per share for fiscal 2025, along with an average earnings surprise of 9.2%, position Copa Holdings favorably for investors [12]

Core Viewpoint - Copa Holdings, S.A. reported fourth-quarter 2024 earnings per share of $3.99, exceeding the Zacks Consensus Estimate of $3.84, but reflecting a 10.7% decline year over year. Revenues of $877.1 million fell short of the Zacks Consensus Estimate of $880.1 million, marking a 4.4% year-over-year decrease primarily due to a 4.8% drop in passenger revenues [1][2]. Financial Performance - Passenger revenues, which accounted for 94.9% of total revenues, decreased by 4.8% compared to the fourth quarter of 2023, driven by a 10.8% decline in passenger yield and a 0.4 percentage-point drop in load factor [2]. - Cargo and mail revenues increased by 9.2% year over year to $29.0 million, while other operating revenues grew by 34.8% year over year to $14.9 million, attributed to higher ConnectMiles revenues from non-air partners [3]. - Total operating expenses decreased by 3.7% year over year to $672.9 million, influenced by a 22.6% reduction in average fuel prices and an 8.3% decrease in sales and distribution costs [6]. Operational Metrics - Copa Holdings' traffic, measured in revenue passenger miles, grew by 6.7% year over year, and capacity, measured in available seat miles, increased by 7.2% from the previous year. However, the load factor decreased by 0.4 percentage points to 86.3% [4]. - Revenue per available seat mile (RASM) declined by 10.4% year over year to 11.3 cents, while passenger revenue per available seat mile fell by 11.2% to 10.8 cents [5]. Cash and Debt Position - At the end of the fourth quarter, Copa Holdings had cash and cash equivalents of $613.31 million, a significant increase from $275.25 million at the end of the previous quarter. Total debt, including lease liabilities, rose to $1.94 billion from $1.87 billion [8]. Future Outlook - Management expects consolidated capacity to grow by 7-8% year over year, with an anticipated operating margin of 20-22%. RASM is projected to be 11.3 cents, and the load factor is expected to reach 86.5%. Non-fuel unit costs are anticipated to be 5.8 cents, with fuel costs expected at $2.60 per gallon [10].

Financial Data and Key Metrics Changes - The company reported a net profit for Q4 of $166.2 million or $3.99 per share, and for the full year, the net profit was $608.5 million or $14.56 per share [25] - The operating profit for Q4 was $204.2 million with an operating margin of 23.3%, while the full year operating profit was $753.4 million with a 21.9% operating margin [25][31] - The company ended the year with over $1.4 billion in cash and investments, representing 42% of the last twelve months' revenues, and had $2 billion in debt and lease liabilities [26] Business Line Data and Key Metrics Changes - Capacity increased by 7.2% year over year in Q4, and for the full year, capacity increased by 8.6% [17][19] - Unit revenues (RASM) for Q4 were 11.3 cents, a 10.4% decrease compared to Q4 2023, primarily due to a 10.8% yield reduction [17] - The unit cost excluding fuel (CASM ex-fuel) for Q4 was 5.9 cents, a 2.6% improvement compared to Q4 2023 [18] Market Data and Key Metrics Changes - The company was recognized as the most on-time airline in Latin America for 2024, with an on-time performance of 88.2% [20] - The company anticipates a continuation of the current demand environment in the region for 2025, with expected capacity growth of 7% to 8% year over year [22] Company Strategy and Development Direction - The company aims to maintain cost discipline and continue expanding its network as the most complete and convenient hub for travel in the Americas [22][24] - The focus remains on lowering unit costs and strengthening the network to deliver strong financial results [131] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in delivering strong margins for 2025, projecting an operating margin within a range of 20% to 22% [31] - The management acknowledged challenges such as currency weakness and increased industry capacity impacting yields but expects a potential positive inflection in the second half of the year [45] Other Important Information - The board of directors approved a quarterly dividend payment of $1.61 per share for 2025, maintaining last year's payout [29] - The company repurchased $87 million of its ongoing $200 million share repurchase program during 2024 [30] Q&A Session Summary Question: Fleet details and delivery expectations - Management confirmed that the delivery schedule from Boeing is acceptable, with 13 aircraft expected this year, mostly in the second half [36] Question: CapEx expectations - CapEx for this year is expected to be lower, around $850 million, with cash CapEx around $200 million [39] Question: RASM trends and future prospects - Management indicated that RASM guidance is yearly, with expectations for a slight improvement in the first quarter but overall similar trends continuing [44] Question: Overcapacity in specific regions - Management noted that capacity growth in certain markets, such as Brazil and Colombia, has been around 20%, impacting yields [50] Question: FX volatility management - Management stated that they price in dollars but sell in local currencies, with some hedging in place for Brazilian sales [56] Question: Cargo revenue and profitability - The company operates a single freighter, with most cargo revenue coming from passenger flights, and expects profitability from the additional freighter [86] Question: Business travel demand - Management indicated that corporate accounts show flat business traffic year over year, with no expected growth [59] Question: Jet fuel tariffs and expenses - Management confirmed that they are not at a disadvantage in any market regarding jet fuel costs [120] Question: M&A and alliances - Management expressed satisfaction with the current relationship with United Airlines and sees no immediate need for changes [124]

Core Insights - Copa Holdings reported revenue of $877.05 million for the quarter ended December 2024, a decrease of 4.4% year-over-year, and EPS of $3.99, down from $4.47 in the same quarter last year [1] - The reported revenue was slightly below the Zacks Consensus Estimate of $880.05 million, resulting in a revenue surprise of -0.34%, while the EPS exceeded the consensus estimate of $3.84 by 3.91% [1] Financial Performance Metrics - Load Factor was reported at 86.3%, slightly above the average estimate of 86.1% from five analysts [4] - PRASM (Passenger revenue per ASM) was 10.8 cents, matching the four-analyst average estimate [4] - Yield was reported at 12.5 cents, slightly below the four-analyst average estimate of 12.56 cents [4] - Average Price Per Fuel Gallon was $2.38, lower than the $2.43 average estimate from four analysts [4] - ASMs (Available seat miles) totaled 7.75 billion, below the average estimate of 7.81 billion [4] - CASM Excluding Fuel was reported at 5.9 cents, slightly better than the average estimate of 5.96 cents [4] - CASM was 8.7 cents, also better than the average estimate of 8.82 cents [4] - RPMs (Revenue passenger miles) were 6.68 billion, below the average estimate of 6.71 billion [4] - RASM was reported at 11.3 cents, slightly above the average estimate of 11.28 cents [4] - Fuel Gallons Consumed were 91.2 million, lower than the average estimate of 92.33 million [4] - The total number of aircraft remained at 112, consistent with the average estimate [4] - Operating Revenues from Passenger revenue were $833.19 million, below the average estimate of $844.35 million, representing a year-over-year decline of 5.3% [4] Stock Performance - Shares of Copa Holdings have returned -2.5% over the past month, contrasting with the Zacks S&P 500 composite's increase of +4.3% [3] - The stock currently holds a Zacks Rank 4 (Sell), indicating potential underperformance relative to the broader market in the near term [3]

Core Viewpoint - Copa Holdings reported quarterly earnings of $3.99 per share, exceeding the Zacks Consensus Estimate of $3.84 per share, but down from $4.47 per share a year ago, indicating a 10.7% year-over-year decline in earnings [1][2] Financial Performance - The company achieved revenues of $877.05 million for the quarter ended December 2024, which was 0.34% below the Zacks Consensus Estimate and a decrease from $916.93 million in the same quarter last year, reflecting a year-over-year revenue decline of 4.5% [2] - Over the last four quarters, Copa Holdings has surpassed consensus EPS estimates four times but has only topped revenue estimates once [2] Stock Performance and Outlook - Since the beginning of the year, Copa Holdings shares have increased by approximately 1.8%, while the S&P 500 has gained 3.2%, indicating underperformance relative to the broader market [3] - The current consensus EPS estimate for the upcoming quarter is $4.08, with expected revenues of $895.58 million, and for the current fiscal year, the EPS estimate is $15.29 on revenues of $3.66 billion [7] Industry Context - The Transportation - Airline industry, to which Copa Holdings belongs, is currently ranked in the top 23% of over 250 Zacks industries, suggesting a favorable industry outlook [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact investor sentiment and stock performance [5][6]

Core Insights - Copa Holdings reported a net profit of US$166.2 million or US$3.99 per share for 4Q24, and a full-year net profit of US$608.5 million or US$14.56 per share, showing a decrease from the previous year's adjusted net profit of US$671.0 million or US$16.68 per share [5][10][15] - The company experienced a 4.0% increase in revenue passengers carried in 4Q24 compared to 4Q23, with a total of 3,444 thousand passengers [4][5] - Operating revenues for 4Q24 were US$877.1 million, a 3.9% decrease from US$912.8 million in 4Q23, while operating profit was US$204.2 million with an operating margin of 23.3% [6][10][11] Financial Performance - The operating profit for the full year 2024 was US$753.4 million, down from US$807.2 million in 2023, with an operating margin of 21.9% compared to 23.4% in the previous year [5][11] - Revenue per available seat mile (RASM) decreased by 10.4% to 11.3 cents in 4Q24, while operating cost per available seat mile excluding fuel (Ex-fuel CASM) decreased by 2.6% to 5.9 cents [5][6][15] - The company ended 2024 with approximately US$1.4 billion in cash and investments, representing 42% of the last twelve months' revenues [5][12] Capacity and Operations - Capacity, measured in available seat miles (ASMs), increased by 7.2% in 4Q24 compared to 4Q23, with a total of 7,747 million ASMs [4][6] - Copa Airlines was recognized as the most on-time airline in Latin America for 2024, achieving an on-time performance of 88.2% [5][8] Shareholder Returns and Corporate Actions - The company repurchased US$87 million worth of shares in 2024 as part of its US$200 million share repurchase program, representing approximately 2% of total outstanding shares [5][12] - The Board of Directors approved a quarterly dividend payment of US$1.61 per share for 2025, maintaining the previous year's dividend [5][12] Leadership Changes - Peter Donkersloot was appointed as Chief Financial Officer effective March 10, 2025, bringing over 20 years of international experience [5][8]

Copa Holdings, S.A. (CPA) reported traffic numbers for January 2025 on the back of upbeat air-travel demand. Driven by high passenger volumes, revenue passenger miles (a measure of traffic) improved on a year-over-year basis in January.To match the demand swell, CPA is increasing its capacity. In January, available seat miles (a measure of capacity) increased 22.1% year over year. Revenue passenger miles increased 23.6% year over year. Since traffic outpaced capacity expansion, the load factor (percentage o ...