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Copa Holdings S.A. (CPA)
:CPA

Copa Holdings (CPA) AI Stock Analysis

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Copa Holdings

(NYSE:CPA)

Rating:82Outperform
Price Target:
$119.00
▲(14.83%Upside)
Copa Holdings is well-positioned for growth with strong financial performance, solid valuation metrics, and a positive outlook from recent earnings. Technical indicators suggest momentum but caution due to potential overbought conditions. Overall, its financial stability, strategic initiatives, and attractive valuation support a positive investment outlook.
Positive Factors
Financial Performance
EPS of US$4.28/sh was 10% above consensus, indicating robust financial performance and potential for future profitability.
Operational Efficiency
Total capacity rose by 5.2%, resulting in a higher load factor, which suggests improved efficiency and potential profitability.
Traffic Growth
Copa's total traffic increased 7.5% year-over-year, reflecting strong demand and positive growth for the company.
Negative Factors
Revenue Challenges
The 2025 EBIT margin guide increased to 21%-23% despite lower RASM, highlighting potential revenue challenges.
Yield Decline
Copa has experienced declines in yields for the past 6 quarters, which could impact revenue growth.

Copa Holdings (CPA) vs. SPDR S&P 500 ETF (SPY)

Copa Holdings Business Overview & Revenue Model

Company DescriptionCopa Holdings, S.A. (CPA) is a leading Latin American provider of airline passenger and cargo services. The company operates through its main subsidiary, Copa Airlines, which offers flights to various destinations across North, Central, and South America, as well as the Caribbean. Headquartered in Panama City, Panama, Copa Holdings is known for its extensive network and high-quality service, making it a preferred choice for travelers in the region.
How the Company Makes MoneyCopa Holdings makes money primarily through the sale of airline tickets for passenger travel. This includes both international and domestic flights, with a significant portion of revenue derived from its hub operations at Tocumen International Airport in Panama City, which connects passengers to various destinations. In addition to passenger services, the company also generates revenue from cargo and mail transportation services, as well as through ancillary services such as baggage fees, seat selection, and onboard sales. Partnerships with other airlines through codeshare agreements and its membership in the Star Alliance contribute to its revenue by expanding its reach and offering connecting flight opportunities. Additionally, strategic management of fuel costs, fleet optimization, and operational efficiency play crucial roles in maintaining profitability.

Copa Holdings Earnings Call Summary

Earnings Call Date:May 07, 2025
(Q1-2025)
|
% Change Since: 8.83%|
Next Earnings Date:Aug 06, 2025
Earnings Call Sentiment Positive
Copa Holdings reported a strong financial performance with a solid operating margin, increased capacity, and effective cost management. However, challenges such as decreased unit revenues and competitive pressures in specific markets were noted. The overall sentiment leans towards positive due to the company's robust financial position and strategic initiatives.
Q1-2025 Updates
Positive Updates
Strong Operating Margin
Copa Holdings reported a 23.8% operating margin in Q1 2025, showing resilience despite a lower year-over-year passenger yield environment.
Capacity and Passenger Traffic Increase
Capacity increased by 9.5% year-over-year, and passenger traffic grew by 10.1% compared to Q1 2024, leading to a load factor increase of 0.4 percentage points to 86.4%.
Cost Management Success
Unit costs excluding fuel decreased by 4.3%, driven by lower sales and distribution expenses and reductions in passenger servicing costs.
On-Time Performance and Network Expansion
Copa Airlines achieved a 90.8% on-time performance and announced new services to San Diego, Salta, and Tucuman, enhancing its network.
Strong Financial Position
Copa Holdings ended the quarter with over $1.3 billion in cash and short- and long-term investments, representing 39% of the company's last 12-month revenues.
Dividend Payment
The company announced a second dividend payment of $1.61 per share, reflecting its commitment to return value to shareholders.
Negative Updates
Decrease in Unit Revenues
Unit revenues (RASM) decreased by 8.1% due to a 9.1% decrease in passenger yields, influenced by additional industry capacity and a weaker currency environment in Latin America.
Challenges in Specific Markets
Weakness in yields was observed in Brazil due to the currency situation, and competitive capacity pressures were noted in Mexico and Central America.
Company Guidance
During Copa Holdings' Q1 2025 earnings call, the company provided several key metrics and guidance highlights. The operating margin for the first quarter was reported at 23.8%, reflecting a robust start to the year despite a challenging environment with a 9.1% decline in passenger yields. Capacity increased by 9.5% year-over-year, while passenger traffic grew by 10.1%, leading to a load factor of 86.4%, a 0.4 percentage point improvement from the previous year. Unit revenues (RASM) were noted at $11.05, representing an 8.1% decrease compared to Q1 2024, primarily due to increased industry capacity and weaker regional currencies. However, unit costs excluding fuel (CASMx) decreased by 4.3% to $5.08. On-time performance was strong at 90.8%, with a completion factor of 99.9%. For the full year, Copa revised its operating margin guidance upward to a range of 21% to 23%, driven by expectations of lower fuel costs and steady passenger demand. The company plans to grow capacity by 7% to 8% year-over-year, with assumptions including a load factor of approximately 86.5%, unit revenues of $0.112, and an all-in fuel price of $2.40 per gallon.

Copa Holdings Financial Statement Overview

Summary
Copa Holdings demonstrates solid financial health with strong profitability, stable leverage, and robust cash flow. The income statement shows a consistent gross profit margin and significant net profit improvements. The balance sheet reveals prudent financial leverage with a solid equity base. Cash flow management is excellent, indicating effective capital use and cash generation.
Income Statement
85
Very Positive
Copa Holdings shows strong profitability with a consistent Gross Profit Margin of around 37% in TTM, indicating efficient cost management. The Net Profit Margin has improved significantly over the years, reaching about 17.7% in TTM, reflecting effective operational strategies. Revenue growth is stable, with minor fluctuations, and EBIT and EBITDA margins are healthy at 21.8% and 27.5% respectively, demonstrating robust operational performance.
Balance Sheet
80
Positive
The company maintains a solid financial position, evidenced by a debt-to-equity ratio of 0.78 in TTM, indicating prudent financial leverage. The Return on Equity is impressive at 24.5%, showcasing strong profitability relative to shareholder equity. The equity ratio stands at 43.2%, reflecting a strong equity base. Overall, the balance sheet is stable with a healthy mix of debt and equity financing.
Cash Flow
78
Positive
Copa Holdings exhibits strong cash flow management, with a significant Operating Cash Flow to Net Income Ratio of 1.6, suggesting excellent cash conversion efficiency. The Free Cash Flow to Net Income Ratio is also strong at 1.6, indicating effective use of capital. Free Cash Flow has grown substantially, reflecting improved cash generation capabilities.
Breakdown
TTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income StatementTotal Revenue
3.45B3.45B3.46B2.97B1.51B801.00M
Gross Profit
1.28B1.23B1.27B1.07B550.06M-229.00M
EBIT
751.23M753.39M807.23M450.38M-86.73M-460.93M
EBITDA
948.62M1.12B1.08B741.68M370.51M-298.40M
Net Income Common Stockholders
609.23M608.53M514.10M348.05M43.84M-598.61M
Balance SheetCash, Cash Equivalents and Short-Term Investments
916.35M1.20B915.18M934.75M1.02B889.88M
Total Assets
5.75B5.74B5.20B4.69B4.25B3.85B
Total Debt
1.94B2.00B1.75B1.68B1.60B1.39B
Net Debt
1.77B1.39B1.54B1.56B1.39B1.28B
Total Liabilities
3.27B3.37B3.07B3.20B2.95B2.57B
Stockholders Equity
2.48B2.37B2.12B1.49B1.30B1.28B
Cash FlowFree Cash Flow
974.21M340.51M214.91M90.26M-32.71M-100.00M
Operating Cash Flow
974.21M996.85M1.04B740.95M462.61M-39.52M
Investing Cash Flow
-782.86M-343.14M-543.00M-555.91M-373.04M-93.76M
Financing Cash Flow
-197.05M-219.65M-394.03M-273.69M2.44M93.61M

Copa Holdings Technical Analysis

Technical Analysis Sentiment
Neutral
Last Price103.63
Price Trends
50DMA
97.28
Positive
100DMA
94.27
Positive
200DMA
91.69
Positive
Market Momentum
MACD
1.93
Positive
RSI
50.34
Neutral
STOCH
28.44
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CPA, the sentiment is Neutral. The current price of 103.63 is below the 20-day moving average (MA) of 106.02, above the 50-day MA of 97.28, and above the 200-day MA of 91.69, indicating a neutral trend. The MACD of 1.93 indicates Positive momentum. The RSI at 50.34 is Neutral, neither overbought nor oversold. The STOCH value of 28.44 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for CPA.

Copa Holdings Risk Analysis

Copa Holdings disclosed 50 risk factors in its most recent earnings report. Copa Holdings 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

Copa Holdings Peers Comparison

Overall Rating
UnderperformOutperform
Sector (58)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
CPCPA
82
Outperform
$4.35B7.1926.07%6.09%-1.06%5.86%
ALALK
68
Neutral
$5.92B17.738.90%20.82%47.79%
LULUV
68
Neutral
$18.35B38.245.63%2.24%3.26%27.77%
AAAAL
61
Neutral
$7.19B12.58-21.27%1.92%36.07%
58
Neutral
$4.95B18.19-16.94%6.95%13.73%-24.47%
43
Neutral
$1.62B-11.30%-3.02%66.90%
* General Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
CPA
Copa Holdings
103.63
14.31
16.02%
ALK
Alaska Air
46.70
5.19
12.50%
JBLU
JetBlue Airways
4.21
-1.45
-25.62%
LUV
Southwest Airlines
31.44
3.50
12.53%
AAL
American Airlines
10.56
-0.72
-6.38%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

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.