Should Copa Holdings (NYSE:CPA) Be Disappointed With Their 50% Profit?

By
Simply Wall St
Published
June 03, 2021
NYSE:CPA

While Copa Holdings, S.A. (NYSE:CPA) shareholders are probably generally happy, the stock hasn't had particularly good run recently, with the share price falling 13% in the last quarter. But at least the stock is up over the last five years. Unfortunately its return of 50% is below the market return of 121%.

Check out our latest analysis for Copa Holdings

Copa Holdings isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. When a company doesn't make profits, we'd generally expect to see good revenue growth. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

In the last 5 years Copa Holdings saw its revenue shrink by 7.7% per year. The falling revenue is arguably somewhat reflected in the lacklustre return of 8% per year over that time. Arguably that's not bad given the soft revenue and loss-making position. Of course, a closer look at the bottom line - and any available analyst forecasts - could reveal an opportunity (if they point to future growth).

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

earnings-and-revenue-growth
NYSE:CPA Earnings and Revenue Growth June 4th 2021

Copa Holdings is a well known stock, with plenty of analyst coverage, suggesting some visibility into future growth. So it makes a lot of sense to check out what analysts think Copa Holdings will earn in the future (free analyst consensus estimates)

What about the Total Shareholder Return (TSR)?

Investors should note that there's a difference between Copa Holdings' total shareholder return (TSR) and its share price change, which we've covered above. The TSR attempts to capture the value of dividends (as if they were reinvested) as well as any spin-offs or discounted capital raisings offered to shareholders. Its history of dividend payouts mean that Copa Holdings' TSR of 66% over the last 5 years is better than the share price return.

A Different Perspective

Copa Holdings shareholders gained a total return of 37% during the year. But that was short of the market average. On the bright side, that's still a gain, and it's actually better than the average return of 11% over half a decade This suggests the company might be improving over time. It's always interesting to track share price performance over the longer term. But to understand Copa Holdings better, we need to consider many other factors. Consider risks, for instance. Every company has them, and we've spotted 1 warning sign for Copa Holdings you should know about.

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.

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This article by Simply Wall St is general in nature. 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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