Yahoo Finance Southwest Airlines Co. (NYSE:LUV) First-Quarter Results: Here's What Analysts Are Forecasting For This Year
Last week, you might have seen that Southwest Airlines Co. (NYSE:LUV) released its first-quarter result to the market. The early response was not positive, with shares down 8.0% to US$27.03 in the past week. The statutory results were not great - while revenues of US$6.3b were in line with expectations,Southwest Airlines lost US$0.39 a share in the process. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
See our latest analysis for Southwest Airlines
Taking into account the latest results, the consensus forecast from Southwest Airlines' 17 analysts is for revenues of US$28.1b in 2024. This reflects an okay 5.1% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to bounce 88% to US$1.23. In the lead-up to this report, the analysts had been modelling revenues of US$28.4b and earnings per share (EPS) of US$1.33 in 2024. The analysts seem to have become a little more negative on the business after the latest results, given the small dip in their earnings per share numbers for next year.
It might be a surprise to learn that the consensus price target was broadly unchanged at US$27.76, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values Southwest Airlines at US$38.00 per share, while the most bearish prices it at US$19.00. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We can infer from the latest estimates that forecasts expect a continuation of Southwest Airlines'historical trends, as the 6.9% annualised revenue growth to the end of 2024 is roughly in line with the 7.6% annual growth over the past five years. Juxtapose this against our data, which suggests that other companies (with analyst coverage) in the industry are forecast to see their revenues grow 6.6% per year. It's clear that while Southwest Airlines' revenue growth is expected to continue on its current trajectory, it's only expected to grow in line with the industry itself.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Happily, there were no real changes to revenue forecasts, with the business still expected to grow in line with the overall industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that in mind, we wouldn't be too quick to come to a conclusion on Southwest Airlines. Long-term earnings power is much more important than next year's profits. We have forecasts for Southwest Airlines going out to 2026, and you can see them free on our platform here.
Even so, be aware that Southwest Airlines is showing 3 warning signs in our investment analysis , and 1 of those is significant...
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
