Estimates have been rising for
Copa Holdings, S. A.
) after the company delivered better than expected first quarter
revenue and earnings.
It is a Zacks #2 Rank (Buy) stock.
The company also recently increased its annual dividend by 28% to
$2.10 per share, which equates to a yield of 2.6%. Valuation is
attractive too, with shares trading at less than 10x forward
Copa Holdings provides services to 59 destinations in 28 countries
in North, Central and South America and the Caribbean. It is
headquartered in Panama City, Panama.
Copa has a market cap of $3.6 billion.
First Quarter Results
Copa reported better-than-expected first quarter results on May 9.
Earnings per share came in at $2.04, beating the Zacks Consensus
Estimate of $2.00. It was an 11% increase over the same quarter in
Total revenue surged 30% to $543 million, well ahead of the Zacks
Consensus Estimate of $522 million. Operating revenue per available
seat mile (RASM) was up 6% to 14.2 cents, while operating cost per
available seat mile (CASM) rose 10% to 11.3 cents (largely due to a
20% increase in the effective price of jet fuel).
Operating income was up 12% year-over-year while the operating
margin declined from 23.7% to 20.5% of revenue.
Following strong Q1 results, analysts revised their estimates
higher for both 2012 and 2013, sending the stock to a Zacks #2 Rank
Analysts are projecting strong growth for Copa over the next two
years. The Zacks Consensus Estimate for 2012 is $7.85, which
represents 11% EPS growth. The 2013 consensus estimate is currently
$9.15, corresponding with 17% EPS growth.
Copa pays an annual dividend up to 30% of its net income. In May it
paid out $2.10 per share, which equates to a 2.6% dividend yield.
This was a 28% increase over the previous year and marked the 5th
dividend hike in the last 6 years.
Valuation looks compelling with shares trading at just 9.3x forward
earnings, a discount to the industry median of 10.0x. Its
Enterprise Value to EBITDA multiple is 8.4, below its historical
multiple of 9.7.
The Bottom Line
With nice tailwinds stemming from an emerging middle class, this
airline offers investors plenty of growth potential. Throw in a
2.6% dividend yield, and shares look very attractive at just 9.3x
Todd Bunton is the Growth & Income Stock Strategist for
and Editor of the
Income Plus Investor service
COPA HLDGS SA-A (CPA): Free Stock Analysis
To read this article on Zacks.com click here.