Yahoo Finance Is a Beat Ahead for Southwest Airlines' (LUV) Q1 Earnings?
Southwest Airlines Co. (LUV) is scheduled to report first-quarter 2024 results on Apr 25.
Southwest Airlines has surpassed the Zacks Consensus Estimate in two of the preceding four quarters, the average beat being 52.18%. However, the company missed the Zacks Consensus Estimate in one quarter and met the mark in the remaining quarter.
Let’s see how things have shaped up for Southwest Airlines this earnings season.
Q1 Expectations
The Zacks Consensus Estimate for LUV’sfirst-quarter 2024 revenues is pegged at $6.45 billion, indicating 13.08% year-over-year growth. The top line is likely to have been aided by healthy leisure demand and continued yield strength, mainly during the holiday time, coupled with record ancillary revenues, loyalty program revenues, and passengers carried. Solid first-quarter 2024 operational performance and fewer flight cancelations in late January might have acted as other tailwinds. Managed business trends continue to strengthen sequentially, which aligns with expectations. Overall, demand remains stable.
Backed by this uptick, LUV now expects its first-quarter available seat miles (ASMs or capacity) to improve 11% from the year-ago period (prior view: up 10%). Revenue per available seat mile (RASM) for the first quarter is now expected to be flat to up 2% compared with the prior view of up 2.5-4%.
On the contrary, LUV has raised its first-quarter 2024 economic fuel costs per gallon guidance in the range of $2.95-$3 (prior view: $2.70 to $2.80). High fuel costs due to an escalation in oil prices are a bane and are likely to hurt Southwest Airlines' first-quarter results. As fuel expenses represent a key input cost for any airline player, the uptick in these costs will naturally hurt LUV’s bottom line in the first quarter. LUV expects to incur a net loss in first-quarter 2024.
Additionally, cost per available seat mile (CASM, excluding fuel, oil and profit-sharing expenses, and special items) is now anticipated to increase 6% in the first quarter from the comparable period in 2022 (prior view: increase 5-6%).
Interest expense is now expected to be $65 million (prior view: $62 million) in the first quarter. Apart from these rise in expenses, LUV is also weighed down by lesser-than-expected aircraft deliveries from Boeing.
Notably, the Zacks Consensus Estimate for first-quarter earnings has been revised 94% downward over the past 90 days.
What Our Model Says
Our proven model predicts an earnings beat for Southwest Airlines this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.
Southwest Airlines has an Earnings ESP of +2.14% and a Zacks Rank #3.
Southwest Airlines Co. Price, Consensus and EPS Surprise
Southwest Airlines Co. price-consensus-eps-surprise-chart | Southwest Airlines Co. Quote
Highlights of Q4
Southwest Airlines reported fourth-quarter 2023 earnings of 37 cents per share, which outpaced the Zacks Consensus Estimate of 11 cents. In the year-ago reported quarter, LUV incurred a loss of 38 cents per share.
Revenues of $6,822 million outpaced the Zacks Consensus Estimate of $6,741.5 million and improved 10.5% year over year.
Other Stocks to Consider
Here are a few stocks from the broader Zacks Transportation sector that investors may consider, as our model shows that these have the right combination of elements to beat their first-quarter 2024 earnings:
American AirlinesAAL has an Earnings ESP of +6.51% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
AAL is scheduled to report first-quarter 2024 earnings on Apr 25. The Zacks Consensus Estimate for first-quarter earnings has declined 21.74% over the past 60 days. AAL has surpassed the Zacks Consensus Estimate in each of the preceding four quarters. The average beat is 119%.
Westinghouse Air Brake TechnologiesWAB has an Earnings ESP of +4.98% and a Zacks Rank #3. WAB is scheduled to report first-quarter 2024 earnings on Apr 24.
WAB has an impressive earnings surprise history, having surpassed the Zacks Consensus Estimate in each of the preceding four quarters, the average beat being 6.63%.
Expeditors International of WashingtonEXPD has an Earnings ESP of +0.92% and a Zacks Rank #3. EXPD is scheduled to report first-quarter 2024 earnings on May 7. Lackluster volumes (with respect to air-freight tonnage and ocean containers) due to weakening demand and falling rates are likely to have hurt EXPD’s performance in the to-be-reported quarter.
The Zacks Consensus Estimate for first-quarter earnings has been revised 7.08% downward over the last 60 days. EXPD has surpassed the Zacks Consensus Estimate for earnings in only one of the preceding four quarters and missed thrice, the average miss being 3.37%.
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Southwest Airlines Co. (LUV) : Free Stock Analysis Report
Expeditors International of Washington, Inc. (EXPD) : Free Stock Analysis Report
American Airlines Group Inc. (AAL) : Free Stock Analysis Report
Westinghouse Air Brake Technologies Corporation (WAB) : Free Stock Analysis Report
