Will Copa Holdings' Operating Margin Continue to Be Robust in 2025?

Latin America’s carrier, Copa Holdings CPA, has excelled in a key area, operating margin, which indicates the amount of profit a company generates from its primary business activities. The metric indicates how efficiently a company manages its operating costs, such as raw materials, labor and other expenses related to production and sales. Copa Airlines has been able to sustain operating margins of more than 20%, making it one of the most profitable airlines globally. For example, the carrier reported an operating margin (on an adjusted basis) of 23.5% in 2023 and 21.9% in 2024. Management expects the carrier to end 2025 with an adjusted operating margin in the 21-23% range. Our expectation of 22.8% is at the higher end of the company’s guided range.CPA has excelled in the area of cost management, driving operating margin. Copa Holdings has taken steps to streamline operations and reduce unnecessary expenses, demonstrating resilience in a challenging market environment. This focus on efficiency helps maintain a healthy balance sheet, allowing the company to navigate fluctuations in demand more effectively. Factors like low fuel costs, focus on maintaining a strong on-time performance and a passenger-friendly approach support CPA’s margins. The carrier’s low-cost base, highlighting efficiency, should enable it to maintain excellent margins. CPA carries a Zacks Rank #2 (Buy) at present.You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.How Are Other Airlines Performing in Respect of Operating Margin?Delta Air Lines DAL reported an operating margin (on an adjusted basis) of 4.6% in the first quarter of 2025, down from the year-ago figure of 5.1%. The U.S. airline expects adjusted operating margins in the 11-14% band in the second quarter of 2025. Given the economic uncertainty, DAL is focusing on reducing planned capacity growth apart from actively managing costs and capital expenditures to drive margins this year.American Airlines AAL performed dismally with respect to adjusted operating margins in the first quarter of 2025 due to the increase in operating expenses led by the expenditure on salaries and benefits. Adjusted operating margin in the June quarter is expected to be in the 6-8.5% range. Our estimate is currently pegged at 7.8%.CPA’s Price Performance, Valuation and EstimatesShares of CPA have gained 17.4% in the past six months, outperforming its industry’s 12.4% decline in the same timeframe.Image Source: Zacks Investment ResearchFrom a valuation perspective, CPA appears undervalued. Going by its price/earnings ratio, the company is trading at a forward earnings multiple of 6.02, down from the industry’s 10.65.Image Source: Zacks Investment ResearchThe Zacks Consensus Estimate for CPA’s 2025 and 2026 EPS has moved up in the past 30 days.Image Source: Zacks Investment Research Zacks Names #1 Semiconductor StockIt's only 1/9,000th the size of NVIDIA which skyrocketed more than +800% since we recommended it. NVIDIA is still strong, but our new top chip stock has much more room to boom.With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $803 billion by 2028.See This Stock Now for Free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Delta Air Lines, Inc. (DAL): Free Stock Analysis Report Copa Holdings, S.A. (CPA): Free Stock Analysis Report American Airlines Group Inc. (AAL): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks