Air Canada (OTCMKTS:ACDVF) Stock Price Up 14% After Better-Than-Expected Earnings

Key Points

• Air Canada shares jumped 14% after the airline reported quarterly EPS of $0.29, well above the $0.11 consensus estimate, and revenue of $4.41 billion versus the $4.34 billion forecast.
• The company will raise C$2.5 billion by selling a 25% stake in Aeroplan, retaining control while using the proceeds to strengthen its balance sheet and pursue an investment-grade credit rating.
• Despite strong travel demand and record operating revenue, Air Canada cut its full-year earnings outlook as jet-fuel costs surged nearly 50%; labor-related and other charges also weighed on results.

Air Canada (OTCMKTS:ACDVF - Get Free Report) shot up 14% during mid-day trading on Wednesday after the company announced better than expected quarterly earnings. The stock traded as high as $22.43 and last traded at $22.31. Approximately 38,239 shares changed hands during trading, a decline of 77% from the average session volume of 168,488 shares. The stock had previously closed at $19.57.

The company reported $0.29 earnings per share (EPS) for the quarter, beating the consensus estimate of $0.11 by $0.18. Air Canada had a return on equity of 27.71% and a net margin of 3.45%.The company had revenue of $4.41 billion for the quarter, compared to the consensus estimate of $4.34 billion.

Key Air Canada News

Here are the key news stories impacting Air Canada this week:

• Positive Sentiment: Scotiabank upgraded Air Canada from “hold” to “strong buy,” signaling increased confidence in the airline’s valuation and earnings prospects. Zacks.com
• Positive Sentiment: Air Canada will raise C$2.5 billion by selling a 25% minority stake in Aeroplan to Blackstone, La Caisse and other Canadian institutions. The transaction values Aeroplan at C$10 billion, while Air Canada retains control of the loyalty program. Proceeds should strengthen the balance sheet and support the company’s effort to regain an investment-grade credit rating. Aeroplan investment announcement
• Positive Sentiment: Second-quarter adjusted earnings beat expectations: Air Canada reported earnings of $0.29 per share versus the $0.11 consensus estimate, while revenue of $4.41 billion exceeded the $4.34 billion forecast. Record operating revenue and adjusted EBITDA of $719 million also reflected strong travel demand. Air Canada Q2 earnings report
• Neutral Sentiment: The earnings beat was tempered by lower EPS than the $0.43 reported a year earlier and an operating loss that included $388 million in labor-related and other charges. These items may limit the immediate benefit of the strong operating performance. Air Canada second-quarter results
• Negative Sentiment: Air Canada reduced its full-year earnings outlook after jet-fuel costs surged nearly 50% amid geopolitical tensions. Higher fuel expense could pressure margins and offset some of the benefits from strong demand and the Aeroplan proceeds. Air Canada cuts outlook

Analyst Upgrades and Downgrades

Several equities research analysts have recently weighed in on the company. BMO Capital Markets reissued an "outperform" rating on shares of Air Canada in a research report on Wednesday, July 8th. Zacks Research raised shares of Air Canada from a "strong sell" rating to a "hold" rating in a research report on Tuesday, May 19th. Scotiabank upgraded shares of Air Canada from a "hold" rating to a "strong-buy" rating in a research note on Tuesday. Finally, National Bank Financial raised shares of Air Canada from a "hold" rating to a "strong-buy" rating in a report on Tuesday, July 7th. Two investment analysts have rated the stock with a Strong Buy rating, two have issued a Buy rating and five have issued a Hold rating to the company. According to MarketBeat.com, Air Canada has a consensus rating of "Moderate Buy".

Air Canada Price Performance

The company has a market cap of $6.23 billion, a price-to-earnings ratio of 12.03, a price-to-earnings-growth ratio of 0.56 and a beta of 1.42. The company has a current ratio of 0.56, a quick ratio of 0.53 and a debt-to-equity ratio of 3.32. The company has a fifty day moving average price of $17.01 and a two-hundred day moving average price of $15.07.

About Air Canada

Air Canada is the largest airline in Canada and one of the leading carriers in North America. Founded in 1937 as Trans-Canada Air Lines and rebranded as Air Canada in 1965, the company operates scheduled passenger and cargo services on six continents. The airline maintains membership in the Star Alliance network, offering seamless connections and coordinated loyalty benefits to travelers worldwide.

Through its mainline operations and subsidiaries—including Air Canada Rouge, Air Canada Cargo and Air Canada Vacations—the company provides a broad range of services.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.

Continue following MarketBeat

Add MarketBeat as your preferred source on Google to see our latest stories in your feed.

Add As Preferred Source