Controladora Vuela Reports Strong Earnings Growth Amid Industry Challenges

Controladora Vuela (VLRS) announced quarterly earnings of $0.32 per share, exceeding the Zacks Consensus Estimate of $0.19. This marks a significant improvement from a loss of $0.33 per share in the same quarter last year. The reported earnings have been adjusted for non-recurring items.

This quarterly performance represents an earnings surprise of 68.42%. In the previous quarter, it was anticipated that this low-cost airline operator would report earnings of $0.05 per share, but it actually achieved $0.09, achieving a surprise of 80%.

For the past four quarters, the company has consistently beaten consensus EPS estimates.

Operating within the Zacks Transportation – Airline industry, Controladora Vuela reported revenues of $813 million for the quarter ending September 2024, which is 2.15% above the Zacks Consensus Estimate. However, this figure is down from $848 million a year prior. The company has surpassed consensus revenue estimates three out of the last four quarters.

The future direction of the stock’s price, based on these latest results and forthcoming earnings projections, will largely depend on comments from management during the earnings call.

Since the start of the year, Controladora Vuela shares have dropped by 25.2%, contrasting with the S&P 500’s increase of 22.7%.

What Lies Ahead for Controladora Vuela?

Despite its underperformance so far this year, investors are curious about what’s next for Controladora Vuela’s stock.

While there are no definitive answers, a reliable approach is to consider the company’s earnings outlook. This includes current earnings expectations for upcoming quarters and any recent changes in those expectations.

Research indicates a strong link between short-term stock movements and earnings estimate revisions. Investors can monitor these revisions independently or utilize the Zacks Rank, which effectively leverages earnings estimate changes.

Prior to this earnings report, the trend in estimate revisions for Controladora Vuela was favorable. Although changes may occur following the recent earnings release, the current consensus translates to a Zacks Rank #2 (Buy), indicating that shares are anticipated to outperform in the near term. A complete list of today’s Zacks #1 Rank (Strong Buy) stocks is available.

It will be interesting to observe how the earnings estimates for future quarters evolve. The current consensus EPS estimate stands at $0.65 on $813.36 million in revenues for the next quarter, and $0.92 on $3.1 billion in revenues for the entire fiscal year.

Additionally, it’s important for investors to recognize that the broader industry outlook can significantly influence the stock’s performance. The Transportation – Airline sector currently ranks in the top 12% among over 250 Zacks industries. Historical data shows that the top half of Zacks-ranked industries outperform the bottom half by more than two-to-one.

Air Canada (ACDVF), another competitor in the airline sector, has yet to announce its results for the quarter ending September 2024. Expectations indicate Air Canada might report quarterly earnings of $1.17 per share, reflecting a year-over-year decline of 53.9%. The consensus EPS estimate has been raised by 19.1% over the last month.

Projected revenues for Air Canada are $4.49 billion, showing a 5% decrease compared to the same quarter last year.

Should You Consider Investing in Controladora Vuela (VLRS)?

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Controladora Vuela Compania de Aviacion, S.A.B. de C.V. (VLRS): Free Stock Analysis Report

Air Canada (ACDVF): Free Stock Analysis Report

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