Azul (AZUL) To Report Q4 Earnings: A Beat In The Cards?

Azul S.A. (NYSE:AZUL) is slated to report fourth-quarter 2019 financial numbers on Mar 12, before the market opens.

Azul, which competes with the likes of Copa Holdings (NYSE:CPA) and Gol Linhas Aereas Inteligentes (NYSE:GOL) in the Latin American aviation space, has an impressive track record with respect to earnings per share. The carrier’s bottom line outperformed the Zacks Consensus Estimate in three of the last four quarters, missing expectations on one occasion. The average beat is above 100%.

AZUL SA Price and EPS Surprise

AZUL SA Price and EPS Surprise

AZUL SA price-eps-surprise | AZUL SA Quote

Considering this, let’s delve into the factors that might have influenced the company’s performance in the December quarter.

Akin to the last few quarters, passenger revenues backed by impressive demand for air travel are likely to have boosted the company’s top line in the to-be-reported quarter. Load factor (% of seats filled by passengers) is also likely to have increased on higher traffic growth. Additionally, cargo revenues are likely to have risen in the fourth quarter owing to e-commerce growth. Increased fares are also likely to have driven the top line.

Further, moderate fuel costs are likely to have supported bottom-line growth in the quarter to be reported. Moreover, the addition of the highly fuel-efficient Embraer E2 jet to its fleet is likely to have aided the bottom-line improvement in the December quarter.

However, increased costs on salaries, wages and benefits are expected to get reflected in the bottom-line number. Also, depreciation of the Brazilian currency is likely to have negatively impacted the fourth-quarter performance.

What Does the Zacks Model Say?

Our proven model predicts a beat for Azul this earnings season. The combination of the following two key ingredients — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — increases the chances of an earnings beat. You can see the complete list of today’s Zacks #1 Rank stocks here.

Earnings ESP: Azul has an Earnings ESP of +16.13% as the Most Accurate Estimate is pegged at 90 cents, 12 cents higher than the Zacks Consensus Estimate. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Azul sports a Zacks Rank of 1, currently.

Highlights of Q3 Earnings

Azul’s earnings (excluding $1.83 from non-recurring items) of 92 cents per share beat the Zacks Consensus Estimate of 61 cents. Moreover, the bottom line compared favorably with the year-ago figure of 25 cents per share. Results were aided by higher passenger revenues on solid demand for air travel. Additionally, operating revenues in the quarter increased in double digits on a year-over-year basis to $764.6 million owing to the company’s cost-control initiatives. However, the top line fell short of the Zacks Consensus Estimate of $790.7 million.

Another Stock to Consider

Investors may also consider Wheaton Precious Metals (NYSE:WPM) as it possesses the right combination of elements to beat on earnings in its upcoming release.

Wheaton Precious Metals has a Zacks Rank #2 and an Earnings ESP of +4.17% . The company is slated to report fourth-quarter earnings on Mar 11.

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