Unlike Most Airlines, Copa Shows Earnings Stability

By
A A A

Airline stocks aren't known for earnings stability.

Many airlines listed in the stock market today can't stay in the black long enough to have a five-year EPS Stability Factor. Of the 10 stocks in the airline group that have a rating, the average score is 49.

The gauge runs from 0 (calm) to 99 (wild).


Copa Holdings ( CPA ) is the exception. The stock has a five-year Earnings Stability Factor of 6 -- best in the group. The five-year EPS growth rate is 20%. The five-year revenue growth rate is 15%.

The airline provides passenger and cargo service to 29 countries, mostly in Latin America and the Caribbean. There were 83 planes in Copa's fleet as of December. The average age of the fleet is 4.3 years, and that number will likely drop when more Boeing 737-800 plane orders are delivered in 2014.

Latin America is not as mature of a market as North America. Copa has opportunities to grow. The company expects to continue adding flights and destinations.

Earnings growth has been slow in recent quarters -- 3%, 8% and 4%. However, analysts expect it to pick up this year. They estimate 2013 EPS will rise 26%. The Street expects sales to grow 15%.

The dividend policy is unusual. Copa pays a dividend once a year. The payout has been increased in six of the past seven years; in 2009 it was unchanged.

Usually the dividend is paid in June, but Copa moved the June 2013 payout to December to let shareholders avoid a potential tax increase. The December payout was $2.25 a share, providing a current annual yield of 2.12%.

Unless something changes, investors buying now won't get a dividend payout this year.

One risk is that almost six of every 10 Copa workers are in unions.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.




This article appears in: Personal Finance , Investing Ideas

Referenced Stocks: CPA

Investor's Business Daily

Investor's Business Daily

More from Investor's Business Daily:

Related Videos

Stocks

Referenced

60%

Most Active by Volume

114,644,289
  • $15.58 ▼ 4.65%
73,296,582
  • $107.72 ▼ 4.47%
65,585,474
  • $101.05 ▼ 3.13%
63,233,841
  • $23.88 ▼ 3.79%
50,630,790
  • $10.76 ▲ 3.46%
48,554,982
  • $13.72 ▼ 1.08%
47,526,669
  • $41.82 ▼ 3.91%
46,987,469
  • $22.01 ▼ 14.16%
As of 9/1/2015, 04:15 PM

Find a Credit Card

Select a credit card product by:
Select an offer:
Search
Data Provided by BankRate.com