Is Copa Holdings Still a Hidden Gem After a 46.6% Surge in 2025?

• Ever wondered if Copa Holdings is a hidden gem or trading at a premium? Let’s take a closer look at what investors are seeing right now.
• The stock has enjoyed serious momentum, up 46.6% year-to-date and rising an impressive 38.9% over the last twelve months.
• Much of this recent surge seems to tie into industry optimism around travel demand and positive developments in Latin America, as well as Copa's ongoing expansion plans and strategic partnerships. News about airline partnerships and expanding routes has certainly put Copa on more investors’ radars.
• On our valuation check, Copa Holdings scores 4 out of 6 for being undervalued, so it is definitely worth examining how traditional methods measure up. There is also a smarter way to assess valuation, which we will get into by the end of this article.

Copa Holdings delivered 38.9% returns over the last year. See how this stacks up to the rest of the Airlines industry.

Approach 1: Copa Holdings Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model estimates a company's true worth by projecting its future cash flows and then discounting those back to their present value. This approach aims to determine what the business is fundamentally worth today, based on its ability to generate cash in the coming years.

For Copa Holdings, the DCF calculation uses the 2 Stage Free Cash Flow to Equity model. The company currently generates Free Cash Flow of approximately $255.49 million, with forecasts indicating a moderate increase over the coming years. By 2027, analyst estimates suggest Free Cash Flow could reach $282 million. Long-term projections extrapolated by Simply Wall St indicate a downward trend, with FCF expected to settle around $70 million annually by 2035. These cash flows are all reported in US dollars ($).

Based on these projections, the DCF analysis arrives at an estimated intrinsic value of $32.28 per share. However, considering the current share price, this suggests the stock is trading at a staggering 289.4% premium above its intrinsic value. In other words, the DCF model indicates that Copa Holdings is significantly overvalued at today's price levels.

Result: OVERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Copa Holdings may be overvalued by 289.4%. Discover 843 undervalued stocks or create your own screener to find better value opportunities.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Copa Holdings.

Approach 2: Copa Holdings Price vs Earnings

The Price-to-Earnings (PE) ratio is a widely used way to value profitable companies, because it directly links a company’s share price to its actual earnings. For Copa Holdings, which continues to generate healthy profits, the PE ratio offers a clear snapshot of what investors are willing to pay for each dollar of current earnings.

It is important to remember that growth prospects and risk levels help shape what a “fair” PE ratio should be. Fast-growing businesses or lower-risk companies tend to command higher multiples. In contrast, slower growth or higher uncertainty can justify lower ratios.

Currently, Copa Holdings is trading at a PE ratio of 8.14x. The average PE ratio for the Airlines industry is about 8.94x, while the average for peers sits at 24.24x, reflecting a wide range of valuations across the sector.

Simply Wall St’s proprietary Fair Ratio for Copa Holdings is 13.34x. This accounts for not just its industry position, but also its earnings growth, profit margins, market cap, and business risks. This makes it a more tailored benchmark than simple industry or peer averages because those do not account for company-specific factors that shape fair value.

Comparing the Fair Ratio to Copa’s actual PE, the stock appears to be undervalued relative to what would be justified by its fundamentals and outlook.

Result: UNDERVALUED

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Upgrade Your Decision Making: Choose your Copa Holdings Narrative

Earlier we mentioned that there's an even better way to understand valuation, so let's introduce you to Narratives. A Narrative is simply your unique, data-backed story about Copa Holdings, the “why” that links your assumptions for future growth, profit margins, and risks to a financial forecast and an estimated fair value.

Unlike static models, Narratives connect real-world drivers (like Copa’s route expansion or fuel cost pressures) with your view on future performance. This makes valuation more personal and relevant. They are an easy, interactive tool available to all investors on the Simply Wall St Community page and are used by millions to share perspectives and test ideas.

With Narratives, you can quickly see if your fair value is above or below the current share price, helping you decide when to buy, hold, or sell as the story evolves. Narratives update dynamically when new news, earnings releases, or forecasts arrive, ensuring your valuation stays current.

For example, some investors base their Copa Holdings Narrative on strategic network growth and digital innovation, leading to a bullish $190.00 price target. Others focus more on market risks and margin volatility, landing at a more cautious $118.00. This way, you can easily compare every perspective before making your own decision.

Do you think there's more to the story for Copa Holdings? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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