A month has gone by since the last earnings report for Copa Holdings (CPA). Shares have lost about 4.5% in that time frame, underperforming 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 the most recent earnings report in order to get a better handle on the important catalysts.

Copa Holdings Beats on Q3 Earnings

Copa Holdings' third-quarter 2024 earnings per share of $3.50 surpassed the Zacks Consensus Estimate of $3.48 but declined 20.3% year over year. Revenues of $854.7 million lagged the Zacks Consensus Estimate of $860 million and fell by 1.5% year over year due to upbeat passenger revenues.

Passenger revenues (which contributed 95.8% to the top line) decreased 1.8% from the third quarter of 2023. The downside was mainly led by the last-minute suspension of flights between Panama and Venezuela at the end of July, weaker currencies in Latin America and increased industry capacity in the region. As a result, passenger yield declined 8.7% year over year.

Cargo and mail revenues grew 4.3% to $24.45 million due to higher volumes, partly offset by lower cargo yields. Other operating revenues were $11.88 million, up 8.3% year over year due to higher ConnectMiles revenues from non-air partners.

The operating margin declined 3.3 percentage points from the year-ago quarter.

CPA’s Other Financial Details

On a consolidated basis, Copa Holdings’ traffic (measured in revenue passenger miles) grew 7.6% year over year, and capacity (measured in available seat miles) increased 9.5% from the year-ago quarter. With traffic growth outpacing capacity expansion, the load factor (percentage of seats filled by passengers) decreased 1.6 percentage points to 86.2% in the reported quarter.

Passenger revenue per available seat miles dropped 10.3% year over year to 10.5 cents. Revenue per available seat mile (RASM) declined 10.1% to 11 cents. Cost per available seat mile dipped 6.2%. Excluding fuel, the metric fell 1.6%. The average fuel price per gallon fell by 13.3% to $2.60.

Total operating expenses increased 2.8% year over year to $681 million due to higher capacity, offset by lower sales, and distribution and fuel costs. Expenses on wages, salaries, benefits and other employee expenses rose 8.7% year over year, whereas maintenance, materials and repairs increased 18.1% year over year. Sales and distribution costs decreased 8% year over year, and fuel costs fell by 5.3% in the same period. Passenger servicing costs grew 13.3% from the year-ago quarter. Other operating and administrative expenses increased 15.2% from the third quarter of 2023.

Copa Holdings exited the third quarter with cash and cash equivalents of $275.25 million compared with $200.64 million at the prior-quarter end. Total debt, including lease liabilities, was $1.9 billion compared with $1.8 billion at the second-quarter end.

CPA ended the third quarter with a consolidated fleet of 110 aircraft, which comprises 67 Boeing 737-800s, 32 Boeing 737 MAX 9s, nine Boeing 737-700s, one Boeing 737 MAX 8 and one Boeing 737-800 freighter.

CPA’s 2024 & 2025 Outlook

CPA’s management now expects consolidated capacity to grow 9% year over year, and the operating margin is expected to come in the range of 21-22%. RASM is now expected to be 11.4 cents (prior view: 11.5 cents).

The load factor is now expected to be 86% (prior view: 86.5%).

Non-fuel unit costs are anticipated to be 5.8 cents. The fuel cost is expected to be $2.67 per gallon, down from the prior guidance of $2.70.

For 2025, the company anticipates increasing its capacity by approximately 7% to 9% compared to 2024, with unit costs, excluding fuel (Ex-Fuel CASM), projected to be around 5.8 cents.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates revision.

The consensus estimate has shifted -8.56% due to these changes.

VGM Scores

At this time, Copa Holdings has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Copa Holdings has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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