Azul SA (AZUL) AI Stock Analysis

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Azul SA

(NYSE:AZUL)

47Neutral

Azul SA faces substantial financial challenges with high leverage and profitability issues, impacting its overall score. Technical indicators show weak momentum, and valuation is unattractive due to negative earnings. However, strong earnings call guidance and strategic improvements offer a positive outlook for future performance.

Positive Factors

Merger Potential

A potential merger with GOL prompted an upgrade for AZUL shares.

Synergies and Connectivity

Synergies from the revenue side look feasible, as companies’ network would likely improve connectivity and generate higher income from passengers and the cargo businesses.

Negative Factors

Currency and Interest Rate Risks

The price objective is reduced due to BRL’s devaluation and a higher Selic rate.

Equity Dilution

Significant dilution expected to current shareholders.

Azul SA (AZUL) vs. S&P 500 (SPY)

Market Cap

$235.40M

Dividend YieldN/A

Average Volume (3M)914.71K

Price to Earnings (P/E)―

Beta (1Y)1.29

Revenue Growth-2.65%

EPS Growth-250.90%

CountryUS

Employees15,367

SectorIndustrials

Sector Strength69

IndustryAirlines, Airports & Air Services

Share Statistics

EPS (TTM)-14.47

Shares Outstanding111,916,930

10 Day Avg. Volume1,060,418

30 Day Avg. Volume914,707

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)0.06

Price to Cash Flow (P/CF)N/A

P/FCF Ratio0.00

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$4.75

Price Target Upside202.55% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering3

Azul SA Business Overview & Revenue Model

Company DescriptionAzul S.A., together with its subsidiaries, provides passenger and cargo transportation services in Brazil. As of December 31, 2021, the company operated 850 daily departures to 125 destinations through a network of 259 non-stop routes with a fleet of 179 aircraft. It is also involved in the loyalty programs, travel packages, investment fund, logistics solutions, and aircraft financing activities. The company was incorporated in 2008 and is headquartered in Barueri, Brazil.

How the Company Makes MoneyAzul SA generates revenue primarily through the sale of airline tickets for passenger transportation, which constitutes the majority of its income. The company also makes money through cargo services, transporting goods and packages across its network. Additionally, Azul leverages ancillary services such as in-flight sales, seat selection fees, and loyalty programs to boost its earnings. Partnerships with other airlines and agreements with tourism and travel service providers further contribute to its revenue streams. These partnerships often result in code-sharing agreements and shared marketing initiatives, enhancing Azul's market presence and operational reach.

Azul SA Financial Statement Overview

Summary

Azul SA shows revenue growth and operational efficiency but is hindered by significant profitability challenges. The balance sheet indicates high leverage and financial instability, while cash flow shows strong operating cash flow but declining free cash flow.

Income Statement

Neutral

Azul SA has shown a significant increase in revenue over recent years, with a revenue growth rate of approximately 5.24% from 2023 to 2024. However, the company is struggling with profitability, as evidenced by a negative net profit margin of -46.88% in 2024, despite a relatively healthy gross profit margin of 26.38%. The EBIT margin stands at 17.36%, indicating operational efficiencies, but overall profitability is severely impacted by high net losses.

Balance Sheet

Negative

The balance sheet reveals financial instability, characterized by a negative stockholders' equity of -30.44 billion in 2024, resulting in a concerning debt-to-equity ratio. The company's liabilities exceed its assets, and the equity ratio is negative, reflecting a highly leveraged financial structure that poses substantial risks to financial stability.

Cash Flow

Neutral

Azul SA demonstrates strong operational cash flow generation, with an operating cash flow to net income ratio of -0.30 in 2024, indicating that cash flow is being generated despite net losses. However, the free cash flow has decreased from the previous year, leading to a free cash flow growth rate of -42.04%. The free cash flow to net income ratio is -0.17, which shows challenges in converting net income into cash flow.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
19.53B	18.55B	15.95B	9.98B	5.74B
	Gross Profit
5.15B	3.13B	3.17B	1.81B	-531.82M
	EBIT
3.39B	1.66B	1.43B	54.80M	-1.40B
	EBITDA
3.56B	4.62B	5.22B	566.33M	-6.55B
	Net Income Common Stockholders
-9.15B	-2.38B	-722.37M	-4.21B	-10.83B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
1.28B	1.90B	668.35M	3.08B	3.16B
	Total Assets
26.27B	20.53B	18.72B	18.53B	15.79B
	Total Debt
37.54B	26.34B	23.97B	24.91B	19.88B
	Net Debt
36.33B	24.44B	23.30B	21.84B	16.82B
	Total Liabilities
56.71B	41.86B	37.73B	36.87B	29.94B
	Stockholders Equity
-30.44B	-21.33B	-19.01B	-18.33B	-14.15B
Cash Flow		Free Cash Flow
1.53B	2.64B	1.18B	-934.90M	633.16M
	Operating Cash Flow
2.79B	3.44B	2.44B	-310.62M	976.23M
	Investing Cash Flow
-1.57B	-874.48M	-639.85M	-684.89M	-403.83M
	Financing Cash Flow
-1.92B	-1.39B	-4.20B	812.63M	933.51M

Azul SA Technical Analysis

Technical Analysis Sentiment

Negative

Last Price1.57

Price Trends

50DMA

1.76

Negative

100DMA

1.95

Negative

200DMA

2.71

Negative

Market Momentum

MACD

-0.07

Negative

RSI

45.70

Neutral

STOCH

52.53

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AZUL, the sentiment is Negative. The current price of 1.57 is below the 20-day moving average (MA) of 1.61, below the 50-day MA of 1.76, and below the 200-day MA of 2.71, indicating a bearish trend. The MACD of -0.07 indicates Negative momentum. The RSI at 45.70 is Neutral, neither overbought nor oversold. The STOCH value of 52.53 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for AZUL.

Azul SA Risk Analysis

Azul SA disclosed 65 risk factors in its most recent earnings report. Azul SA reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Azul SA Peers Comparison

Overall Rating

UnderperformOutperform

Sector (63)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
LTM	77 Outperform	$9.17B	9.34	166.51%	0.88%	10.24%	68.75%
UAL	77 Outperform	$21.53B	6.97	33.57%	―	6.23%	20.08%
LUV	64 Neutral	$14.27B	32.96	4.50%	2.90%	5.34%	-6.20%
Sector *	63 Neutral	$4.29B	11.05	5.73%	232.30%	4.75%	-5.69%
AAL	52 Neutral	$6.19B	8.54	-21.27%	―	2.70%	2.20%
AZUL	47 Neutral	$235.40M	―	17.49%	―	-2.65%	-250.90%
JBLU	42 Neutral	$1.26B	―	-26.60%	―	-3.50%	-148.99%

* Industrials Sector Average

Performance Comparison

AZUL

Azul SA

1.57

-4.21

-72.84%

JBLU

JetBlue Airways

3.67

-3.44

-48.38%

LUV

Southwest Airlines

24.74

-3.96

-13.80%

UAL

United Airlines Holdings

66.30

14.92

29.04%

AAL

American Airlines

9.46

-4.65

-32.96%

LTM

LATAM Airlines Group SA Sponsored ADR

30.31

5.59

22.61%

Azul SA Earnings Call Summary

Earnings Call Date: Feb 24, 2025 | % Change Since: -13.74% | Next Earnings Date: May 15, 2025

Earnings Call Sentiment Positive

Despite significant operational and financial challenges, Azul demonstrated strong revenue growth and strategic advancements. The successful capital restructuring and operational efficiencies position the company for future profitability, outweighing the lowlights.

Highlights

Record Revenue and Profitability

Azul reported a record revenue of BRL5.5 billion, up 10% year-over-year, with a strong RASK of BRL0.45. The company also achieved record quarterly EBITDA of BRL2 billion with a margin of 35.2% and EBIT of BRL1.2 billion.

Strategic Network and Capacity Growth

Azul’s unique network allows it to be the only carrier in 82% of its routes. The capacity increased by 11% year-over-year, with expectations for further revenue improvements as Porto Alegre fully reopened.

Diversification and Growth Beyond the Metal

Azul's high-margin business units' contribution to RASK grew to 23% in 4Q '24. The loyalty program now has over 18 million members, and the vacations business saw 63% growth in gross billings in 2024.

Operational Efficiency Improvements

Aircraft utilization increased by almost 13%, and productivity improved by 10% in terms of ASKs per FTE. The CASK was down 6.5% year-over-year.

Successful Capital Restructuring

Azul eliminated almost BRL8.5 billion in debt and raised $500 million of new capital, significantly improving liquidity and cash generation.

Lowlights

Operational and Financial Challenges

Azul faced supply chain and engine challenges, resulting in over BRL1 billion in financial impact. Extreme weather and currency devaluation also posed significant challenges.

Currency Devaluation Impact

The Brazilian real experienced an 18% devaluation in the fourth quarter, which, along with inflation, added pressure on the company's cost structure.

Company Guidance

During Azul's fourth quarter earnings call for fiscal year 2024, the company provided robust guidance and disclosed record financial metrics. Azul reported a record revenue of BRL5.5 billion, representing a 10% year-over-year increase, and a record EBITDA of BRL2 billion with a 35.2% margin. The company maintained a strong RASK of BRL0.45, despite an 11% capacity growth and a 17% drop in fuel prices. The airline's EBIT reached BRL1.2 billion, reflecting its competitive advantages and low unit costs. Azul's diversification strategy, called "Beyond the Metal," contributed significantly, with high-margin business units impacting RASK and accounting for 24% of the 2024 EBITDA. The company's Elevate plan enhanced aircraft utilization by nearly 13% and improved productivity by 10%. For 2025, Azul reaffirmed its guidance, projecting a record EBITDA of BRL7.4 billion, driven by significant revenue growth and a strengthened capital structure after a comprehensive debt restructuring that eliminated BRL6.3 billion in debt and optimized cash generation.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.