GOL Linhas Earnings: An Early Look

Earnings season is just about over, with almost all companies already having reported their quarterly results. But there are still a few companies left to report, and GOL Linhas (NYSE: GOL  ) is about to release its quarterly earnings report. The key to making smart investment decisions with stocks releasing their quarter reports is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed knee-jerk reaction to news that turns out to be exactly the wrong move.

Brazil has been a fast-growing economy in recent years, and as the No. 2 airline serving Brazil and the rest of Latin America, GOL has participated in that growth. Given how well U.S. airlines have done recently, has GOL seen the same success? Let's take an early look at what's been happening with GOL Linhas over the past quarter and what we're likely to see in its quarterly report on Monday.

Stats on GOL Linhas

Analyst EPS Estimate

($0.21)

Year-Ago EPS

$0.19

Revenue Estimate

$1.63 billion

Change From Year-Ago Revenue

32%

Earnings Beats in Past 4 Quarters

1

Source: Yahoo! Finance.

Will GOL Linhas fly higher this quarter?
Over the past few months, analysts have gotten less optimistic about GOL Linhas. Loss estimates for the just-ended quarter have more than doubled, and analysts have also pushed down full-year 2013 earnings calls by $0.04 per share. Yet the shares have risen by nearly 20% since mid-December.

GOL Linhas has emerged as a major force in the Brazilian growth story. Filling a low-cost/low-fare niche in the market, GOL Linhas connects cities within Brazil and throughout Latin America and the Caribbean.

Yet recently, its traffic has suffered somewhat. In February, GOL Linhas said that its primary measure of passenger revenue fell almost 18% from a year ago, while available capacity dropped more than 15%. Load factors fell, and its domestic Brazilian segment was particularly weak. By contrast, its international figures improved sharply, with expansion of flights to Miami and Orlando having a big impact on international growth.

Back in December, GOL Linhas got a big jump on news that it might do an initial public offering of its mileage points program, and the company moved forward with a filing for the IPO last month. With nearly 9 million members in the "Smiles" program, GOL Linhas could reap substantial proceeds from the offering, with the program having grown by about 10% over the past year. Discussions of the possibility that United Continental (NYSE: UAL  ) and Delta Air Lines (NYSE: DAL  ) might do IPOs of their respective frequent-flyer programs several years ago didn't go anywhere, but in GOL's home market, rival TAM, which is now part of LATAM Airlines (NYSE: LFL  ) , successfully offered shares of its "Multiplus" program.

In its quarterly report, watch for news of how GOL's Smiles IPO is proceeding and what the company expects to do with any proceeds. How the airline spends its windfall will go a long way toward determining whether it can boost its growth in the future.

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