CPA

We rate Copa Holdings, S.A. (CPA) as a Buy with a composite score of 69.9/100 at a current price of $145.53. The stock scores above average across the majority of our six quantitative factors and ranks #97 out of 7,333 stocks in our universe, reflecting a favorable risk-reward profile.

The rating is primarily driven by strength in quality (88th percentile) and value (81th percentile), which together account for the majority of the composite score. All factors score above the 40th percentile, indicating no material weakness in the quantitative profile. We assign a Narrow Moat rating (59/100), Low uncertainty, and Exemplary capital allocation.

Key items to watch: whether strong momentum is fundamentally supported by revenue trends. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

Copa Holdings, S.A. holds an above-average position (#22 of 50) within the Transportation, Communications, Electric, Gas, And Sanitary Services sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 69.9/100 places it at rank #97 in our full 7,333-stock universe. At $7.3B in market capitalization, Copa Holdings, S.A. is a mid-cap player in the Transportation, Communications, Electric, Gas, And Sanitary Services space, which limits certain scale advantages but may allow for more agile strategic execution.

The outlook is moderately positive, with revenue expanding at 0% and favorable momentum (73th percentile) reflecting constructive market sentiment. The business shows steady execution, though the growth rate is below the levels typically associated with high-conviction growth stories. Momentum confirmation provides support for the current price level.

The margin cascade tells an important story: gross margins of 100% (+44.9pp vs sector) narrow to operating margins of 24% (+6.7pp vs sector) and net margins of 17.1%, yielding a gross-to-net conversion rate of 17%. This conversion rate is typical for the sector, suggesting a standard cost structure without notable efficiency advantages or disadvantages.

At a current price of $145.53, Copa Holdings, S.A. appears undervalued relative to its fundamentals. Our value factor score of 81/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. The stock screens as attractively priced on a majority of these measures, suggesting the market may be underappreciating the underlying fundamentals.

The stock currently trades at EV/EBITDA of 2.1x (discounted to peers), P/B of 2.5x, P/S of 0.4x. We evaluate these multiples in the context of both absolute levels and sector-relative positioning to form our valuation view.

We assign a Low uncertainty rating to Copa Holdings, S.A.. The company exhibits strong financial stability with a beta of 0.74, and a stability factor in the 63th percentile. The predictable nature of the business model and solid financial position reduce the range of potential outcomes, giving us confidence in our fair value estimate.

We identify no major risk factors at this time. The company's stability factor sits at the 63th percentile with quality at the 88th percentile, both of which support our low-risk assessment. The absence of material leverage, profitability, or volatility concerns reduces the likelihood of a permanent capital loss scenario.

Key risk mitigants include: healthy gross margins of 100% provide a buffer against cost pressures; above-average stability (63th percentile) suggests predictable business dynamics; a 7.46% dividend yield anchors total return. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile is favorable for long-term investors.

We rate Copa Holdings, S.A.'s capital allocation as Exemplary. Management demonstrates a strong track record of balancing reinvestment with shareholder returns, evidenced by returns on equity of 102.5%, a 7.46% dividend yield, best-in-class net margins of 17.1%. Exemplary allocators typically generate returns on equity above 20% while maintaining debt-to-equity below 50% — Copa Holdings, S.A. meets this high bar.

The balance sheet remains conservatively managed, providing financial flexibility for opportunistic investments while maintaining a margin of safety for shareholders. The company returns capital via a 7.46% dividend yield, and the combination of 42.4% return on assets and controlled leverage suggests management is deploying capital at rates well above the cost of capital — the hallmark of exemplary stewardship.

In summary, Copa Holdings, S.A. receives a Buy rating with a composite score of 69.9/100 (rank #97 of 7,333). Our quantitative framework assigns a Narrow Moat (59/100, trend: stable), Low uncertainty, and Exemplary capital allocation. The average factor score across quality, value, momentum, stability, and investment is 70/100.

Our analysis supports a constructive view on Copa Holdings, S.A.. The combination of identifiable competitive advantages, low uncertainty, and exemplary capital allocation creates a risk-reward profile that favors accumulation at current levels. We recommend investors consider adding this name to portfolios aligned with the stock's risk profile.