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Azul (AZUL) Stock Plummets 64.2% in a Month: Here's Why

Zacks Equity Research
·2-min read

Shares of Latin American carrier Azul AZUL shed 64.2% of value compared with the industry’s 38.3% decline in the past month.

Echoing the plight of most of its peers, Azul has been badly affected by the deflated air-travel demand due to the coronavirus outbreak, which dimmed its prospects in the process.

Coronavirus-Triggered Tumult Deters Azul’s Growth

Due to the coronavirus-induced feeble demand, Azul plans to cut consolidated capacity by 90% in the Mar 25-Apr 30 timeframe. During the period, the company aims to operate 70 non-stop flights per day to 25 cities.

Azul’s Latin American counterparts Gol Linhas GOL and LATAM Airlines LTM also trimmed capacity to match the extremely low-demand scenario. Another Latin American carrier Copa Holdings CPA temporarily terminated all passenger operations.

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Coming back to Azul, in a bid to cut costs for aiding its bottom line in such challenging times, the company decided to reduce its April payroll expenses by nearly 65%. To this end, it halved the pay for executive officers and directors apart from slashing managers’ salaries by 25%.

Moreover, the carrier deferred its 2019 profit sharing process apart from putting a pause on hiring personnel to manage fixed costs.

Negative Estimate Revisions and Lackluster Momentum Score

The pessimism revolving around the stock is evident from the Zacks Consensus Estimate for current-year earnings being revised 53.2% downward in the past 60 days to $1.31.

The company’s Momentum Score of F further highlights its short-term unattractiveness.

Additionally, Azul carries a Zacks Rank #5 (Strong Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Gol Linhas Aereas Inteligentes S.A. (GOL) : Free Stock Analysis Report
 
Copa Holdings, S.A. (CPA) : Free Stock Analysis Report
 
LATAM Airlines Group S.A. (LTM) : Free Stock Analysis Report
 
AZUL SA (AZUL) : Free Stock Analysis Report
 
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Zacks Investment Research