Copa Holdings (CPA) AI Stock Analysis

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Copa Holdings

(NYSE:CPA)

Rating:82Outperform

Price Target:

$119.00

▲(11.77%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

Operational efficiency

Total capacity rose by 5.2%, resulting in a higher load factor, which suggests improved efficiency and potential profitability.

Revenue and growth

Copa's total traffic increased 5.5% compared to the previous year, indicating positive growth for the company.

Negative Factors

Market valuation

Copa is heavily discounted compared to historical multiple levels despite delivering the highest EBIT margin since its 2005 IPO and maintaining a healthy balance sheet.

Yield performance

Copa has experienced declines in yields for the past 6 quarters.

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

Market Cap

$4.38B

Dividend Yield6.05%

Average Volume (3M)300.75K

Price to Earnings (P/E)7.2

Beta (1Y)0.68

Revenue Growth-1.06%

EPS Growth5.86%

CountryUS

Employees7,909

SectorGeneral

Sector StrengthN/A

IndustryAirlines, Airports & Air Services

Share Statistics

EPS (TTM)4.28

Shares Outstanding30,234,830

10 Day Avg. Volume372,966

30 Day Avg. Volume300,746

Financial Highlights & Ratios

PEG Ratio11.28

Price to Book (P/B)1.71

Price to Sales (P/S)0.00

P/FCF Ratio4.35

Enterprise Value/Market Cap1.37

Enterprise Value/Revenue0.43

Enterprise Value/Gross Profit4.71

Enterprise Value/Ebitda1.48

Forecast

1Y Price Target

$150.80

Price Target Upside41.64% Upside

Rating ConsensusStrong Buy

Number of Analyst Covering5

Copa Holdings Business Overview & Revenue Model

Company DescriptionCopa Holdings, S.A. is a leading Latin American provider of passenger and cargo airline services. The company operates through its principal airline subsidiary, Copa Airlines, which is based in Panama City, Panama. Copa Holdings offers flights to destinations across North, Central, and South America, as well as the Caribbean, establishing Panama as a key hub for air travel in the region. The company is known for its modern fleet, extensive network, and commitment to providing reliable and efficient air transportation services.

How the Company Makes MoneyCopa Holdings generates revenue primarily through the sale of airline tickets for passenger travel, which is its largest revenue stream. The company also earns significant income from cargo transportation services and various ancillary services, including baggage fees, seat selection, and onboard sales. Strategic partnerships, such as codeshare agreements with other airlines, expand Copa's network and enhance its service offerings, contributing to its earnings. Additionally, the company's hub-and-spoke model centered in Panama City allows for high connectivity and operational efficiency, further bolstering revenue generation.

Copa Holdings Earnings Call Summary

Earnings Call Date:May 07, 2025

(Q1-2025)

% Change Since: 10.17%|

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

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

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

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.

TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
3.45B	3.45B	3.46B	2.97B	1.51B	801.00M
	Gross Profit
1.28B	1.23B	1.16B	1.09B	550.06M	-229.00M
	EBIT
751.23M	753.39M	806.12M	200.78M	-86.73M	-460.93M
	EBITDA
948.62M	1.12B	1.08B	741.68M	370.51M	-298.40M
	Net Income Common Stockholders
609.23M	608.53M	514.10M	348.05M	43.84M	-598.61M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
916.35M	1.20B	915.18M	934.75M	1.02B	889.88M
	Total Assets
5.75B	5.74B	5.20B	4.69B	4.25B	3.85B
	Total Debt
1.94B	2.00B	1.75B	1.68B	1.60B	1.39B
	Net Debt
1.77B	1.39B	1.54B	1.56B	1.39B	1.28B
	Total Liabilities
3.27B	3.37B	3.07B	3.20B	2.95B	2.56B
	Stockholders Equity
2.48B	2.37B	2.12B	1.49B	1.30B	1.29B
Cash Flow		Free Cash Flow
974.21M	340.51M	214.91M	90.26M	-32.71M	-100.00M
	Operating Cash Flow
974.21M	996.85M	1.04B	740.95M	462.61M	-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	-273.69M	2.44M	93.61M

Copa Holdings Technical Analysis

Technical Analysis Sentiment

Positive

Last Price106.47

Price Trends

50DMA

93.93

Positive

100DMA

92.41

Positive

200DMA

91.14

Positive

Market Momentum

MACD

3.60

Negative

RSI

71.54

Negative

STOCH

74.78

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CPA, the sentiment is Positive. The current price of 106.47 is above the 20-day moving average (MA) of 98.90, above the 50-day MA of 93.93, and above the 200-day MA of 91.14, indicating a bullish trend. The MACD of 3.60 indicates Negative momentum. The RSI at 71.54 is Negative, neither overbought nor oversold. The STOCH value of 74.78 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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 (57)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CPA	82 Outperform	$4.38B	7.24	26.07%	6.05%	-1.06%	5.86%
ALK	68 Neutral	$6.16B	18.42	8.90%	―	20.82%	47.79%
AAL	62 Neutral	$7.38B	12.92	-21.27%	―	1.92%	36.07%
LUV	59 Neutral	$17.64B	36.75	5.63%	2.33%	3.26%	27.77%
Sector *	57 Neutral	$4.84B	20.30	-16.90%	5.20%	13.60%	-28.06%
JBLU	44 Neutral	$1.75B	―	-11.30%	―	-3.02%	66.90%

* General Sector Average

Performance Comparison

CPA

Copa Holdings

108.67

15.32

16.41%

ALK

Alaska Air

52.48

10.74

25.73%

JBLU

JetBlue Airways

5.42

0.05

0.93%

LUV

Southwest Airlines

32.66

6.76

26.10%

AAL

American Airlines

11.64

-1.80

-13.39%

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.