Copa Holdings (CPA) AI Stock Analysis

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Copa Holdings

(NYSE:CPA)

80Outperform

Copa Holdings' stock receives a strong overall score due to its solid financial performance, attractive valuation, and positive earnings call sentiment. The company's ability to manage costs and generate cash, along with a low P/E ratio and high dividend yield, are significant strengths. However, technical indicators suggest caution due to potential overbought conditions. Monitoring market dynamics, particularly in specific regional markets, will be essential for sustained performance.

Positive Factors

Earnings

EPS of US$4.28 per share exceeded consensus by 10% and MSe by 9%, highlighting better-than-expected earnings.

Financial Performance

Copa delivered an EBITDAR that beat Visible Alpha consensus by 8% and MSe by 5%, showcasing strong financial performance.

Valuation

Copa is heavily discounted compared to historical multiples, despite delivering the highest EBIT margin since its 2005 IPO, indicating an attractive valuation.

Negative Factors

Cost Concerns

Despite lower fuel costs, there are concerns about the sustainability of margin levels due to higher costs excluding fuel.

Market Position

Copa's significant discount is viewed as unwarranted, indicating potential market skepticism about its valuation.

Yield Decline

Copa has experienced declines in yields for the past 6 quarters, posing a challenge to revenue growth.

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

Market Cap

$4.05B

Dividend Yield6.55%

Average Volume (3M)318.56K

Price to Earnings (P/E)6.8

Beta (1Y)0.68

Revenue Growth-0.48%

EPS Growth13.87%

CountryUS

Employees7,909

SectorGeneral

Sector StrengthN/A

IndustryAirlines, Airports & Air Services

Share Statistics

EPS (TTM)4.28

Shares Outstanding30,234,830

10 Day Avg. Volume309,532

30 Day Avg. Volume318,558

Financial Highlights & Ratios

PEG Ratio-1.82

Price to Book (P/B)1.73

Price to Sales (P/S)0.00

P/FCF Ratio4.18

Enterprise Value/Market Cap1.34

Enterprise Value/Revenue0.39

Enterprise Value/Gross Profit4.47

Enterprise Value/Ebitda1.28

Forecast

1Y Price Target

$148.75

Price Target Upside51.23% Upside

Rating ConsensusStrong Buy

Number of Analyst Covering4

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

Very Positive

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.

Balance Sheet

Positive

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.

Cash Flow

Very Positive

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.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
3.45B	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
1.12B	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
340.51M	214.91M	90.26M	-32.71M	-100.00M
	Operating Cash Flow
996.85M	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

Technical Analysis Sentiment

Positive

Last Price98.36

Price Trends

50DMA

92.04

Positive

100DMA

90.75

Positive

200DMA

90.17

Positive

Market Momentum

MACD

2.03

Negative

RSI

64.58

Neutral

STOCH

76.64

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 98.36 is above the 20-day moving average (MA) of 91.62, above the 50-day MA of 92.04, and above the 200-day MA of 90.17, indicating a bullish trend. The MACD of 2.03 indicates Negative momentum. The RSI at 64.58 is Neutral, neither overbought nor oversold. The STOCH value of 76.64 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 (56)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CPA	80 Outperform	$4.05B	6.76	27.07%	6.55%	-0.48%	13.87%
ATSG	69 Neutral	$1.48B	55.88	1.92%	―	-5.25%	-49.90%
ALK	69 Neutral	$6.32B	18.90	8.90%	―	20.82%	47.79%
LUV	59 Neutral	$17.00B	35.72	5.63%	2.31%	3.26%	27.77%
AAL	58 Neutral	$7.33B	12.83	-21.27%	―	1.92%	36.07%
Sector *	56 Neutral	$4.46B	10.71	-18.54%	5.13%	17.31%	-65.85%
JBLU	43 Neutral	$1.56B	―	-11.30%	―	-3.02%	66.90%

* General Sector Average

Performance Comparison

CPA

Copa Holdings

98.36

-0.56

-0.57%

ATSG

Air Transport Services

22.48

8.06

55.89%

ALK

Alaska Air

52.03

8.16

18.60%

JBLU

JetBlue Airways

4.88

-1.15

-19.07%

LUV

Southwest Airlines

31.18

3.85

14.09%

AAL

American Airlines

11.11

-3.82

-25.59%

Copa Holdings Earnings Call Summary

Earnings Call Date:May 07, 2025

(Q1-2025)

% Change Since: 1.78%|

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.

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.