If you want full access to all our reports, data and investing ideas, join The Aerospace Forum , the #1 aerospace, defense and airline investment research service on Seeking Alpha, with access to evoX Data Analytics, our in-house developed data analytics platform.In December 2024, I covered Copa Holdings (NYSE: CPA ) with a strong buy rating. Since then, the stock price has declined by 7.4%. This is of course not the performance we are looking for. However, it should be noted thatDhierin runs the investing ...

Copa Holdings (CPA) ended the recent trading session at $91.51, demonstrating a +1.4% swing from the preceding day's closing price. The stock's performance was ahead of the S&P 500's daily loss of 4.84%. Meanwhile, the Dow experienced a drop of 3.98%, and the technology-dominated Nasdaq saw a decrease of 5.97%.The holding company for Panama's national airline's shares have seen a decrease of 5.93% over the last month, surpassing the Transportation sector's loss of 18.14% and falling behind the S&P 500's los ...

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Core Viewpoint - The market is underestimating Copa Holdings' financial performance, indicating a potential margin of safety at current prices [1]. Company Analysis - Copa Holdings is perceived to have strong financial metrics that are not fully recognized by the market, suggesting an opportunity for investors [1]. Investment Perspective - The current pricing of Copa Holdings shares presents a favorable risk-reward scenario for long-term investors [1].

Copa Holdings, S.A. (CPA) - CPA reported improved revenue passenger miles in February 2025, reflecting strong air-travel demand with a year-over-year increase [1] - Available seat miles increased by 1.7% year over year, while revenue passenger miles rose by 2.3% year over year, indicating that traffic growth outpaced capacity expansion [2] - The load factor increased to 86.7% from 86.3% in February 2024, demonstrating efficient capacity utilization [2] Zacks Rank & Price Performance - CPA currently holds a Zacks Rank of 3 (Hold), with shares gaining 7.3% over the past three months, outperforming the Zacks Airline industry growth of 5.2% [3] Other Airline Companies - LATAM Airlines reported a 4.4% year-over-year increase in consolidated capacity and a 3.1% increase in revenue passenger-kilometers for February 2025 [7] - LATAM's load factor decreased to 83.3% from 84.4% in February 2024, despite transporting over 6.5 million passengers, a 1.8% increase year over year [8] - Ryanair transported 12.6 million passengers in February 2025, reflecting a 14% year-over-year increase, with a stable load factor of 92% [9] - Ryanair operated over 71,360 flights in February 2025, showing improvement from the previous month affected by delayed Boeing deliveries [10]

Summary of Copa Holdings and Industry Performance Core Viewpoint - Copa Holdings has experienced a 3% decline in share price over the past month, which is better than the S&P 500 performance, raising questions about future trends leading up to the next earnings report [1]. Company Performance - The consensus estimate for Copa Holdings has decreased by 8.42% over the past month, indicating a downward trend in earnings expectations [2]. - Copa Holdings currently holds a Zacks Rank of 3 (Hold), suggesting an expectation of in-line returns in the upcoming months [4]. VGM Scores - Copa Holdings has an average Growth Score of C, a Momentum Score of B, and a Value Score of A, placing it in the top 20% for the value investment strategy. The overall aggregate VGM Score is A, which is significant for investors not focused on a single strategy [3]. Industry Comparison - Copa Holdings is part of the Zacks Transportation - Airline industry. In comparison, Southwest Airlines (LUV) has seen a 3.6% increase in share price over the past month [5]. - Southwest Airlines reported revenues of $6.93 billion for the last quarter, reflecting a year-over-year increase of 1.6%, with EPS rising from $0.37 to $0.56 [5]. - Southwest is projected to incur a loss of $0.18 per share for the current quarter, which represents a year-over-year change of +50%, with a Zacks Consensus Estimate adjustment of -15% over the last 30 days [6].

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]