It has been about a month since the last earnings report for Copa Holdings (CPA Quick QuoteCPA - Free Report) . Shares have lost about 12.4% 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 its most recent earnings report in order to get a better handle on the important catalysts.

Copa Holdings Beats on Q1 Earnings

Copa Holdings’  first-quarter 2024 earnings per share of $4.19 surpassed the Zacks Consensus Estimate of $3.27 and improved 5% year over year. Revenues of $893.5 million beat the Zacks Consensus Estimate of $846.2 million and rose 3% year over year on the back of upbeat passenger revenues.

Passenger revenues (which contributed 96.1% to the top line) increased 3% from first-quarter 2023, owing to capacity increase. Cargo and mail revenues fell 5.8% to $21.91 million due to lower cargo yields. Other operating revenues were $12.83 million, up 28.4% year over year.

Operating margin improved 1.9 percentage points from the year-ago quarter, owing to a continued robust demand environment and CPA’s focus on maintaining low ex-fuel unit costs.

On a consolidated basis, Copa Holdings traffic (measured in revenue passenger miles) grew 7.1% year over year and capacity (measured in available seat miles) increased 8%. With traffic growth lagging capacity expansion, the load factor (percentage of seats filled by passengers) decreased 0.7 percentage points to 86% in the reported quarter.

Passenger revenue per available seat miles decreased 4.6% year over year to 12.1 cents. Additionally, revenue per available seat mile (RASM) declined 4.6% to 12.5 cents. Cost per available seat mile dipped 6.9%. Excluding fuel, the metric fell 2%. The average fuel price per gallon slipped 13.9% to $2.90.

Total operating expenses increased 0.5% year over year to $677.5 million, owing to higher capacity, offset by lower fuel, maintenance, materials and repairs costs, and sales and distribution costs. Expenses on wages, salaries and other employee benefits rose 11.4%. Sales and distribution costs decreased 9.6%. Passenger servicing costs grew 45.6%. Flight operation costs increased 13.1%.

Copa Holdings exited the first quarter with cash and cash equivalents of $170.52 million compared with $206.37 million at the fourth-quarter end. Total debt, including lease liabilities, was $1.7 billion, in line sequentially.

CPA ended the first quarter with a consolidated fleet of 106 aircraft, which comprises 67 Boeing 737-800s, 29 Boeing 737 MAX 9s, 9 Boeing 737-700s, and 1 Boeing 737-800 freighter.

2024 Outlook

CPA’s management expects consolidated capacity to grow 10% year over year. Management anticipates an operating margin of 21. The load factor is expected to be 87%. RASM is expected to be 12.0 cents. Non-fuel unit costs and fuel cost per gallon are anticipated to be 5.9 cents and $2.85 per gallon, respectively.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates flatlined during the past month.

The consensus estimate has shifted -9.05% due to these changes.

VGM Scores

Currently, Copa Holdings has an average Growth Score of C, 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

Copa Holdings has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.