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Why Copa Holdings (CPA) Stock Has Surged More than 50% YTD

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It has been a highly successful year for Latin American carrier Copa Holdings CPA . Shares of this Panama City, Panama-based carrier have gained 50.2%, outperforming the Zacks Airline industry 's rally of 15.4% on a year-to-date basis.

Why the Uptick

Strong demand for air travel on the back of an improving Latin American economy has contributed significantly toward Copa Holdings' impressive performance in 2017. The carrier, which competes with the likes of GOL Linhas GOL and LATAM Airlines Group LTM in the Latin American aviation space, has posted a 12.8% increase in traffic (measured in Revenue Seat Miles) in the first 11 months of the year on the back of strong air travel demand.

Additionally, load factor (percentage of seats filled by passengers) has increased 290 basis points to 83.3% on a year-to-date basis as traffic growth outpaced capacity expansion. Given the improving scenario, the company anticipates the high demand for air travel to continue even in the coming years. In fact, it has raised its guidance for 2017 load factor and RASM (revenue per available seat mile) due to the optimism. The company now expects load factor of approximately 83% (previous expectation: 82%) and RASM of around 10.5 cents (previous expectation: 10.4 cents).

Further, the carrier's efforts to check costs are also praiseworthy. With costs reducing and revenues rising, operating margin is expected to expand going forward. The company estimates operating margin in the range of 17-18% in 2017 compared with 12.4% in 2016. For 2018, this Zacks Rank #3 (Hold) carrier estimates an operating margin of 17-19%. Over the long term , the company projects an operating margin of 20% and beyond. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Estimate Revisions & Style Score

Upward estimate revisions reflect optimism in a stock's prospects. Copa Holdings scores impressively on this front. The stock has seen the Zacks Consensus Estimate for current-quarter and current-year earnings being revised 0.4% and 2% upward, respectively, over the last 60 days.

Additionally, the stock has an attractive VGM Score of A. Here V stands for Value, G for Growth and M for Momentum and the score is a weighted combination of these three scores.

Such a score allows investors to eliminate the negative aspects of stocks and select winners. However, it is important to keep in mind that each Style Score will carry a different weight while arriving at a VGM Score.

An Airline to Consider

Investors interested in the airline space may consider SkyWest, Inc. SKYW , which carries a Zacks Rank #2 (Buy).

Shares of SkyWest have surged more than 42% in a year.

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Gol Linhas Aereas Inteligentes S.A. (GOL): Free Stock Analysis Report

Copa Holdings, S.A. (CPA): Free Stock Analysis Report

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LATAM Airlines Group S.A. (LTM): Free Stock Analysis Report

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


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

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