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Azul SA (AZUL)
OTHER OTC:AZUL
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Azul SA
(OTC:AZUL)
Rating:44Neutral
Price Target:
$0.50
▼(-3.85%Downside)
Positive Factors
Liquidity Improvement
Liquidity is expected to improve with actions taken to secure additional funding, including a government-guaranteed credit line.
Merger Potential
AZUL and Abra Group, the majority investor of Gol and Avianca, reached a non-binding MoU on a potential merger between GOL and AZUL.
Revenue Performance
Revenue and demand are tracking well, with operational, FX, and fuel trends moving in a favorable direction since March.
Negative Factors
BRL and Oil Risks
Analyst reiterates an Underperform rating as Azul offers an unattractive risk-return considering BRL/oil risks and a potential large dilution ahead.
Cost Pressures
Costs proved disappointing due to the impact of the Brazilian real’s depreciation against the U.S. dollar and a temporary increase in irregular operations.
Equity Dilution
Further dilution is now inevitable and shares cannot reflect the underlying fundamentals until the $200M optional equity raise is completed and the level of dilution is clear.
Azul SA (AZUL) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$148.19M
Dividend YieldN/A
Average Volume (3M)11.60M
Price to Earnings (P/E)―
Beta (1Y)0.43
Revenue Growth-5.34%
EPS Growth-125.18%
CountryUS
Employees15,367
SectorIndustrials
Sector Strength94
IndustryAirlines, Airports & Air Services
Share Statistics
EPS (TTM)-0.34
Shares Outstanding298,679,930
10 Day Avg. Volume7,162,248
30 Day Avg. Volume11,598,392
Financial Highlights & Ratios
PEG Ratio>-0.01
Price to Book (P/B)-0.02
Price to Sales (P/S)0.00
P/FCF Ratio0.20
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$0.50Price Target Upside-3.85% Downside
Rating ConsensusModerate Sell
Number of Analyst Covering4
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 Earnings Call Summary
Earnings Call Date:May 14, 2025
(Q1-2025)
| % Change Since: -25.71%|
Next Earnings Date:Aug 07, 2025
Earnings Call Sentiment Neutral
Azul reported strong performance in operational efficiency, revenue growth, and business unit expansion, offset by challenges in currency devaluation, operational disruptions, and equity raise difficulties.Q1-2025 Updates
Positive Updates
Operational Excellence Restored
Azul has returned to operational excellence, with significant improvements in efficiency and reliability following OEM challenges faced in 2024.
Revenue Growth and Capacity Increase
Azul reported revenues of R$5.4 billion with a RASK of R$0.42 and a 16% increase in capacity year-over-year.
Business Units Performance
High-margin business units grew from 19% of RASK in Q1 2024 to 23% in Q1 2025, contributing over R$480 million in the quarter.
Loyalty Program and Ancillary Revenue
Loyalty program membership increased to 19 million, with flown revenue up 65% year-over-year; ancillary revenue up 22%.
Cargo and Logistics Business Expansion
Azul Cargo revenue increased by 20% year-over-year, with international revenue up 62% and EBITDA doubling compared to Q1 2024.
Improved Macroeconomic Conditions
The Brazilian real appreciated by 9.3% in 2025, and heating oil prices decreased by over 17%.
Negative Updates
Currency Devaluation Impact
Azul was significantly impacted by a higher-than-expected devaluation of the local currency.
Operational Disruptions and OEM Challenges
The company faced OEM challenges and irregular operations leading to high operational costs and customer litigation.
Natural Disasters Impact
Floods in Southern Brazil turned 10% of the network offline, affecting operations in a profitable region.
Equity Raise Challenges
Azul faced difficulties in raising additional equity capital due to market conditions and anti-dilution clauses.
Company Guidance
In the first quarter of fiscal year 2025, Azul reported revenue of R$5.4 billion with a RASK of R$0.42, remaining flat year-over-year despite a 16% increase in capacity. The company achieved an EBITDA of R$1.4 billion, reflecting a margin of 26%, while EBIT was reported at R$571 million. Azul's ancillary revenue grew by 22% year-over-year, with a 14% increase in ancillary revenue per passenger. The loyalty program expanded to 19 million members, with flown revenue up 65% year-over-year. Azul Cargo's revenue increased by 20%, and EBITDA doubled compared to the first quarter of 2024. Operational improvements led to a 5% increase in aircraft utilization and a 18.9% rise in productivity. Despite challenges from OEM issues affecting operations, Azul's strategic focus on efficiency and revenue growth from business units contributed to a strong quarter.Azul SA Financial Statement Overview
Summary
Azul SA is on a recovery path with revenue growth and operational improvements, but it still faces challenges with heavy losses, high leverage, and negative equity. Positive cash flow from operations provides some stability, but the overall financial situation is precarious due to reliance on debt and persistent net losses.Income Statement
Azul SA has shown a significant increase in total revenue from 2020 to TTM 2025, indicating a strong recovery trajectory. However, the company continues to experience heavy losses, with a negative net income throughout the years, resulting in a negative net profit margin. The gross profit margin has improved, showcasing efficiency in cost management, but the EBIT and EBITDA margins reflect the ongoing struggle with operational profitability.45
Neutral
Balance Sheet
The balance sheet reflects high leverage with a debt-to-equity ratio that is uncomfortably high, compounded by negative stockholders' equity. This suggests financial instability and potential risk if market conditions worsen. The negative equity ratio highlights the company's extreme reliance on debt financing, which could pose a threat to financial sustainability.30
Negative
Cash Flow
Cash flow from operations has been positive, indicating the company can generate cash from its core business activities. However, the high capital expenditures and negative free cash flow growth in recent years point to challenges in maintaining liquidity. The operating cash flow to net income ratio is robust, but the free cash flow to net income ratio remains a concern due to consistent net losses.50
Neutral
| Breakdown | |||||
| TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 20.24B | 19.53B | 18.55B | 15.95B | 9.98B | 5.74B | Gross Profit |
| 6.28B | 5.15B | 3.13B | 3.17B | 1.81B | -531.82M | EBIT |
| 3.16B | 3.39B | 1.66B | 1.43B | 54.80M | -1.40B | EBITDA |
| 5.24B | 3.56B | 4.62B | 5.22B | 566.33M | -6.55B | Net Income Common Stockholders |
| -7.08B | -9.15B | -2.38B | -722.37M | -4.21B | -10.83B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 1.60B | 1.28B | 1.90B | 668.35M | 3.08B | 3.16B | Total Assets |
| 25.55B | 26.27B | 20.53B | 18.72B | 18.53B | 15.79B | Total Debt |
| 35.88B | 37.54B | 26.34B | 23.97B | 24.91B | 19.88B | Net Debt |
| 35.42B | 36.33B | 24.44B | 23.30B | 21.84B | 16.82B | Total Liabilities |
| 54.00B | 56.71B | 41.86B | 37.73B | 36.87B | 29.94B | Stockholders Equity |
| -28.45B | -30.44B | -21.33B | -19.01B | -18.33B | -14.15B |
| Cash Flow | Free Cash Flow | ||||
| 1.51B | 1.53B | 2.64B | 1.18B | -934.90M | 633.16M | Operating Cash Flow |
| 2.54B | 2.79B | 3.44B | 2.44B | -310.62M | 976.23M | Investing Cash Flow |
| -1.37B | -1.57B | -874.48M | -639.85M | -684.89M | -403.83M | Financing Cash Flow |
| -2.04B | -1.92B | -1.39B | -4.20B | 812.63M | 933.51M |
Azul SA Technical Analysis
Negative
0.52
Price Trends
1.08
Negative
1.54
Negative
2.16
Negative
Market Momentum
-0.18
Negative
39.21
Neutral
54.02
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 0.52 is below the 20-day moving average (MA) of 0.56, below the 50-day MA of 1.08, and below the 200-day MA of 2.16, indicating a bearish trend. The MACD of -0.18 indicates Negative momentum. The RSI at 39.21 is Neutral, neither overbought nor oversold. The STOCH value of 54.02 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 2 New Risks
1.
Changes in the credit ratings issued by credit rating agencies could adversely affect our ability to raise funding, our cost of financing and the market price of our securities. Q4, 2023
2.
We have a significant amount of indebtedness and other financial obligations and insufficient liquidity may have a material adverse effect on our financial condition and business. Q4, 2023
Azul SA Peers Comparison
Overall Rating
UnderperformOutperform
Sector (65)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
76 Outperform | $26.53B | 7.39 | 33.57% | ― | 5.31% | 35.95% | |
71 Outperform | $11.33B | 10.64 | 138.69% | 1.66% | 6.41% | 49.58% | |
65 Neutral | $4.44B | 12.22 | 5.28% | 248.14% | 4.08% | -12.12% | |
62 Neutral | $7.51B | 13.24 | -21.27% | ― | 1.92% | 36.07% | |
59 Neutral | $18.87B | 39.32 | 5.63% | 2.21% | 3.26% | 27.77% | |
48 Neutral | $1.85B | ― | -11.30% | ― | -3.02% | 66.90% | |
44 Neutral | $148.19M | ― | 17.49% | ― | -5.34% | -125.18% |
* Industrials Sector Average
Performance Comparison
AZUL
Azul SA
0.52
-4.98
-90.55%
JBLU
JetBlue Airways
5.03
-0.46
-8.38%
LUV
Southwest Airlines
32.27
5.07
18.64%
UAL
United Airlines Holdings
81.62
28.32
53.13%
AAL
American Airlines
11.42
>-0.01
-0.09%
LTM
LATAM Airlines Group SA Sponsored ADR
38.86
14.14
57.20%
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.