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Copa Holdings (CPA)
NYSE:CPA
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Copa Holdings
(NYSE:CPA)
78Outperform
Positive Factors
Financial Performance
Copa delivered the highest EBIT margin since its 2005 IPO, showcasing strong operational efficiency.
Strategic Expansion
Management plans to grow capacity over 10% in both Brazil and Argentina, and around 5% in Colombia, indicating strategic expansion in key markets.
Valuation
Copa is considered heavily discounted compared to historical multiples, with analysts maintaining a Buy recommendation due to its attractive valuation.
Negative Factors
Currency Exposure
Latin American currencies have been under pressure, adding to the financial risks due to currency exposure.
Fuel Costs
Fuel prices have moved significantly higher, presenting a headwind to financial performance.
Revenue and Capacity Challenges
FX and surplus capacity have been material headwinds to RASM, which fell 8.2% and has declined year-over-year in each of the past 6 quarters.
Copa Holdings (CPA) vs. S&P 500 (SPY)
Market Cap
$3.86B
Dividend Yield6.94%
Average Volume (3M)284.36K
Price to Earnings (P/E)6.4
Beta (1Y)0.67
Revenue Growth-0.48%
EPS Growth13.87%
CountryUS
Employees7,625
SectorGeneral
Sector StrengthN/A
IndustryAirlines, Airports & Air Services
Share Statistics
EPS (TTM)14.55
Shares Outstanding30,654,620
10 Day Avg. Volume202,440
30 Day Avg. Volume284,362
Financial Highlights & Ratios
PEG Ratio0.46
Price to Book (P/B)N/A
Price to Sales (P/S)0.00
Price to Cash Flow (P/CF)0.00
P/FCF Ratio0.00
Enterprise Value/Market Cap1.16
Enterprise Value/RevenueN/A
Enterprise Value/Gross Profit3.13
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$148.00Price Target Upside56.83% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering5
Copa Holdings Business Overview & Revenue Model
Company DescriptionCopa Holdings, S.A., through its subsidiaries, provides airline passenger and cargo services. The company offers approximately 204 daily scheduled flights to 69 destinations in 29 countries in North, Central, and South America, as well as the Caribbean from its Panama City hub. As of December 31, 2021, it operated a fleet of 91 aircraft comprising 77 Boeing 737-Next Generation aircraft and 14 Boeing 737 MAX 9 aircraft. Copa Holdings, S.A. was founded in 1947 and is based in Panama City, Panama.
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 Financial Statement Overview
Summary
Copa Holdings exhibits strong financial health characterized by solid profitability, stable balance sheet, and robust cash flow generation. While the company faces slight revenue challenges, its ability to manage costs and generate cash provides a firm foundation for future growth. Monitoring debt levels and market dynamics will be essential for sustaining performance.Income Statement
Copa Holdings has demonstrated strong financial performance with consistent revenue and profit growth over the years. The gross profit margin improved significantly, indicative of efficient cost management. The net profit margin and EBIT margin are healthy, reflecting robust operational profitability. However, the slight decline in revenue from 2023 to 2024 suggests potential market challenges.85
Very Positive
Balance Sheet
The company maintains a solid equity ratio, indicating strong asset backing by equity. The debt-to-equity ratio is moderate, suggesting manageable leverage. Return on equity shows an upward trend, reflecting effective use of equity capital. However, the increase in total debt warrants monitoring for potential leverage risks.78
Positive
Cash Flow
Copa Holdings has shown impressive growth in free cash flow, driven by strong operating cash flows, indicating good cash generation capabilities. The operating cash flow to net income ratio is favorable, demonstrating efficient conversion of profits into cash. Despite healthy cash flows, maintaining the growth trajectory amidst capital expenditure requirements is crucial.82
Very Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 3.44B | 3.46B | 2.97B | 1.51B | 801.00M | Gross Profit |
| 1.43B | 1.16B | 1.09B | 550.06M | -229.00M | EBIT |
| 753.39M | 806.12M | 200.78M | -86.73M | -460.93M | EBITDA |
| 1.08B | 1.08B | 741.68M | 370.51M | -298.40M | Net Income Common Stockholders |
| 608.53M | 514.10M | 348.05M | 43.84M | -598.61M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 1.20B | 915.18M | 934.75M | 1.02B | 889.88M | Total Assets |
| 5.74B | 5.20B | 4.69B | 4.25B | 3.85B | Total Debt |
| 2.00B | 1.75B | 1.68B | 1.60B | 1.39B | Net Debt |
| 1.39B | 1.54B | 1.56B | 1.39B | 1.28B | Total Liabilities |
| 3.37B | 3.07B | 3.20B | 2.95B | 2.56B | Stockholders Equity |
| 2.37B | 2.12B | 1.49B | 1.30B | 1.29B |
| Cash Flow | Free Cash Flow | |||
| 969.73M | 214.91M | 90.26M | -32.71M | -100.00M | Operating Cash Flow |
| 969.73M | 1.04B | 740.95M | 462.61M | -39.52M | Investing Cash Flow |
| -343.14M | -543.00M | -555.91M | -373.04M | -93.76M | Financing Cash Flow |
| -219.65M | -394.03M | -273.69M | 2.44M | 93.61M |
Copa Holdings Technical Analysis
Positive
94.37
Price Trends
91.57
Positive
90.20
Positive
89.91
Positive
Market Momentum
0.14
Negative
57.29
Neutral
86.09
Negative
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 94.37 is above the 20-day moving average (MA) of 88.51, above the 50-day MA of 91.57, and above the 200-day MA of 89.91, indicating a bullish trend. The MACD of 0.14 indicates Negative momentum. The RSI at 57.29 is Neutral, neither overbought nor oversold. The STOCH value of 86.09 is Negative, 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 (55)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $3.86B | 6.37 | 27.07% | 6.94% | -0.48% | 13.87% | |
69 Neutral | $1.48B | 55.88 | 1.92% | ― | -5.25% | -49.90% | |
63 Neutral | $5.53B | 14.74 | 8.90% | ― | 20.82% | 47.79% | |
59 Neutral | $16.29B | 33.94 | 5.63% | 2.58% | 3.26% | 27.77% | |
58 Neutral | $6.61B | 11.58 | -21.27% | ― | 1.92% | 36.07% | |
55 Neutral | $4.35B | 2.82 | -14.64% | 5.20% | 19.56% | -63.38% | |
43 Neutral | $1.55B | ― | -11.30% | ― | -3.02% | 66.90% |
* General Sector Average
Performance Comparison
CPA
Copa Holdings
94.37
0.35
0.37%
ATSG
Air Transport Services
22.48
9.40
71.87%
ALK
Alaska Air
46.99
4.31
10.10%
JBLU
JetBlue Airways
4.76
-1.04
-17.93%
LUV
Southwest Airlines
29.85
4.31
16.88%
AAL
American Airlines
10.52
-3.33
-24.04%
Copa Holdings Earnings Call Summary
Earnings Call Date:Feb 12, 2025
(Q4-2024)
| % Change Since: 5.23%|
Next Earnings Date:May 07, 2025
Earnings Call Sentiment Positive
Copa Holdings demonstrated strong operational and financial performance with impressive operating margins and capacity growth, despite facing challenges such as decreased unit revenues due to currency fluctuations and increased industry capacity. The company maintained a solid financial position and continued to provide value to shareholders. Recognition for operational excellence further underscores its leadership in the region.Q4-2024 Updates
Positive Updates
Strong Operating Margins
Achieved an operating margin of 21.9% for the full year 2024, with a Q4 operating margin of 23.3%, demonstrating effective cost management and operational efficiency.
Capacity and Fleet Expansion
Increased capacity by 8.6% for the full year 2024, with plans to receive 13 additional 737 MAX 8s and 1 Boeing 737-800 freighter in 2025, expanding the fleet to 126 aircraft.
Recognition for Operational Excellence
Copa was recognized by Cirium for the tenth time as the most on-time airline in Latin America with an on-time performance of 88.2% in 2024, and by Skytrax as the best airline in Central America and the Caribbean for the ninth consecutive year.
Strong Financial Position
Ended the year with over $1.4 billion in cash and investments, representing 42% of the last twelve-month revenues, and maintained a low adjusted net debt to EBITDA ratio of 0.5 times.
Shareholder Returns
Announced a quarterly dividend payment of $1.61 per share for 2025 and executed $87 million of a $200 million share repurchase program in 2024.
Negative Updates
Decrease in Unit Revenues
Unit revenues (RASM) decreased by 8.2% for the full year 2024 and 10.4% in Q4, primarily due to weaker currencies in Latin America and increased industry capacity.
Challenges with Panama-Venezuela Operations
Experienced ongoing effects from the cancellation of flights between Panama and Venezuela, impacting unit revenues and capacity adjustments.
Currency Impact
Faced significant negative impact from currency volatility in Latin America with a net impact of approximately $28 million due to translational effects.
Company Guidance
During Copa Holdings' fourth quarter earnings call for fiscal year 2024, the company reported a strong financial performance with an operating margin of 21.9% for the year. The fourth quarter saw an operating margin of 23.3%, despite challenges such as the grounding of the 737 MAX 9 fleet and flight cancellations between Panama and Venezuela. Capacity increased by 7.2% year-over-year for the quarter and 8.6% for the full year. However, unit revenues (RASM) decreased by 10.4% in Q4 and 8.2% for the year, mainly due to a 10.8% yield reduction influenced by weaker Latin American currencies and increased industry capacity. Unit costs excluding fuel (CASM ex-fuel) improved by 2.6% in Q4 and 3% for the year, achieving the full-year CASM ex-fuel target one year ahead of schedule. Copa was recognized for its on-time performance of 88.2%, the highest in the Americas, and has been awarded as the best airline in Central America and the Caribbean by Skytrax. Looking ahead to 2025, Copa anticipates a capacity growth of 7% to 8% and aims to maintain consistent unit costs, projecting an operating margin between 20% to 22%.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.