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GOL Linhas A (NYSE:GOL) will be reporting its first-quarter 2012 earnings on Thursday, May 3, 2012, after the close of the market.

The current Zacks Consensus Estimate for earnings per share (EPS) is a negative 5 cents, representing an annualized loss of 121.33%.

With respect to earnings surprises over the trailing four quarters, GOL underperformed the Zacks Consensus Estimate in three quarters and was in line in one. Average earnings surprise was a negative 265.61%, reflecting that the company has underperformed the Zacks Consensus Estimate by the same magnitude over the last four quarters.

Fourth Quarter and fiscal 2011 Highlights

On March 26, 2012, GOL Linhas reported financial results for the fourth quarter and fiscal 2011. Net income, in the quarter, was recorded at R$54.3 million (US$30.3 million), down 59% compared with R$132.2 million (US$78.2 million) in the year-ago quarter.

For FY11, the company reported adjusted net loss of R$710.4 million (US$425.4 million) versus net income of R$214.2 (US$122.4 million) reported in fiscal 2010.

For the fourth quarter of 2011, consolidated net revenue was R$2,233.5 million (US$1,247.8 million), up 19.5% year over year. This increase reflected incorporation of Webjet's operating revenue of R$280.6 million (US$ 156.8 million) for 87 days within the reported quarter.

In FY11, the company reported total revenue of R$ 7,539.3 million (US$ 4,514.6 million), up 8.0% y/y.

Agreement of Estimate Revisions

In the last 30 days, none of the analysts increased the company's earnings per share estimate while two decreased for the first quarter of 2012. One analyst increased estimate while one decreased the same for the second quarter of 2012 in the last 30 days. For fiscal 2012, two analysts lowered their estimates and three analysts reduced the same for fiscal 2013.

Magnitude of Estimate Revisions

Estimates over the last 30 days decreased from a positive 6 cents per share to the current estimate loss of 5 cents for the first quarter of 2012.

Estimate for fiscal 2012 dropped from 39 cents to 20 cents over the last 30 days while for fiscal 2013, it showed a similar trend and plunged from 69 cents to 55 cents. These estimates represented a year-over-year growth of 112.99% for 2012 and 175.29% for 2013.

Our Take

We are cautious on the first quarter of 2012 results based on rising fuel prices and upsize in operating expenses. Moreover, uncertainty related to the current competitive scenario in the airlines industry alongside depreciating Brazilian currency remains a cause of concern.

GOL Linhas, one of the most profitable low-cost airlines in the world, gives a tough competition to other industry players, such as Copa Holdings SA (NYSE:CPA), LAN Airlines S.A (NYSE:LFL), and TAM S.A (NYSE:TAM).

We currently maintain a long-term Neutral recommendation on the stock. Also, GOL has a Zacks #3 Rank, which translates into a short-term (1-3 months) Hold rating.

Source: GOL Linhas: Earnings Preview