Is A Beat In Store For GOL Linhas (GOL) In Q4 Earnings?

GOL Linhas Aéreas Inteligentes S.A. (NYSE:GOL) is scheduled to report fourth-quarter 2018 results on Feb 28, before market open.

In the third quarter, the company delivered disappointing results, with earnings and revenues missing the Zacks Consensus Estimate. However, passenger revenues improved 8.9% on a year-over-year basis on the back of solid demand for air travel.

Factors at Play

GOL Linhas is expected to perform well in the fourth quarter on the back of solid demand for air travel. Such high demand generally leads to strong passenger revenues, which accounts for a major portion of the company’s revenues. Strong passenger revenues are anticipated to boost top-line results in the to-be-reported quarter. The Zacks Consensus Estimate for fourth-quarter 2018 revenues is pegged at $815.92 million, indicating a rise from $734.3 million reported in the third quarter of 2018.

Moreover, increase in average fares are also expected to drive top-line results in the to-be-reported quarter. Additionally, we are positive on the efforts undertaken by the carrier to reduce debt levels.

Furthermore, constant fleet modernization efforts backed by improved operational efficiency bode well for the company. Such efforts are expected to boost the bottom line in the to-be-reported quarter. The Zacks Consensus Estimate for fourth-quarter 2018 earnings per share (EPS) is pegged at 21 cents, which indicates an increase from a loss of 32 cents in the prior quarter.

However, high costs are expected to dent bottom-line growth in the to-be-reported quarter as was the case with fellow Latin American carrier Copa Holdings (NYSE:CPA) . Also, we are concerned about headwinds like depreciation of Brazilian Real against the U.S. Dollar and soft bookings from the persistent effects of the trucking strike in 2018.

What Does the Model Say?

Our proven model shows that GOL Linhas is likely to beat estimates in the to-be-reported quarter, as it has the perfect combination of the following key ingredients:

Earnings ESP: GOL Linhas has an Earnings ESP of +17.07%. The Most Accurate Estimate is at 24 cents per share, higher than the Zacks Consensus Estimate of 21 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: GOL Linhas carries a Zacks Rank #3 (Hold). Notably, stocks with a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 have higher chances of beating estimates.

Conversely, we caution against stocks with a Zacks Rank #4 (Sell) or 5 (Strong Sell) going into an earnings announcement, especially when the company is seeing negative estimate revisions.

Other Stocks to Consider

Investors interested in the Zacks Transportation sector may check other companies with the right combination of elements to beat estimates in the upcoming releases.

Azul S.A. (NYSE:AZUL) has Earnings ESP of +7.22% and a Zacks Rank #1. The company will release fourth-quarter 2018 results on Mar 14. You can see the complete list of today’s Zacks #1 Rank stocks here.

Air Transport Services Group, Inc. (NASDAQ:ATSG) has Earnings ESP of +9.09% and a Zacks Rank #3. The company will release fourth-quarter 2018 results on Feb 27.

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