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Southwest Airlines has surpassed the Zacks Consensus Estimate in two of the preceding four quarters, the average beat being 57.85%. 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.
Q2 Expectations
The Zacks Consensus Estimate for LUV’s second-quarter 2024 revenues is pegged at $7.35 billion, indicating 4.45% year-over-year growth. The top line is likely to have been aided by healthy leisure demand and continued yield strength.
Backed by this uptick, LUV expects its second-quarter capacity or available seat miles (ASMs) to improve 8-9% from the year-ago reported figure. For third-quarter 2024, LUV anticipates capacity to increase in the low-single digits, and for the fourth quarter of 2024, LUV expects capacity to decrease in the low to mid-single digits. For 2024, management has reaffirmed its capacity expectation to improve 4% on a year-over-year basis.
LUV’s solid operational performance so far is evident from its fewer cancelations. The completion factor quarter to date has averaged almost 99.5% amid challenging weather in Texas and Florida.
On the contrary, LUV now expects its second-quarter revenue per available seat mile (RASM) to decline in the range of 4%-4.5% year over year, which marks a deterioration from the previous guidance of 1.5% to 3.5% decline. The downside in the RASM expectations was owing to the difficulties faced by LUV in adjusting its revenues to current booking patterns and consumer spending trends.
Cost per available seat mile (CASM, excluding fuel, oil and profit-sharing expenses, and special items) is still anticipated to increase in the range of 6.5-7.5% in the second quarter from the comparable period in 2023. Economic fuel costs per gallon are still expected to be between $2.70 and $2.80.
Interest expense is now expected to be $63 million (prior view: $62 million) in the second quarter.
Higher expenses and interest expense are likely to weigh on LUV’s bottom line. Notably, the Zacks Consensus Estimate for LUV’s second-quarter 2024 earnings has been revised downward by 36.2% in the past 90 days to 51 cents per share. Moreover, the consensus mark implies a 53.21% decline from the year-ago actuals.
What Our Model Says
Our proven model does not conclusively predict 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. But that’s not the case here. 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 -2.71% and a Zacks Rank #4 (Sell).
Southwest Airlines reported first-quarter 2024 loss of 36 cents per share, which was wider than the Zacks Consensus Estimate loss of 34 cents. In the year-ago reported quarter, LUV incurred a loss of 27 cents per share.
Revenues of $6.329 billion missed the Zacks Consensus Estimate of $6.451 billion but improved 10.9% year over year. The uptick was owing to solid demand trends, coupled with record first-quarter passenger and ancillary revenues, passengers carried, and new Rapid Rewards Members.
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 on second-quarter 2024 earnings.
CPA will release results on Aug 7. Upbeat air-travel demand is likely to have aided the second-quarter performance.
The Zacks Consensus Estimate for CPA’s second-quarter 2024 earnings has been revised downward by 16.3% in the past 60 days to $2.98 per share. CPA has an impressive earnings surprise history, having surpassed the Zacks Consensus Estimate in each of the preceding four quarters, the average beat being 20.19%.
Expeditors International of Washington (EXPD - Free Report) has an Earnings ESP of +3.03% and a Zacks Rank #2. EXPD is scheduled to report second-quarter 2024 earnings on Aug 6. 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 second-quarter earnings has been revised 1.68% upward in the last 60 days. EXPD surpassed the Zacks Consensus Estimate for earnings in only one of the preceding four quarters and missed thrice, the average miss being 3.44%.
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What Lies Ahead for Southwest Airlines' (LUV) Q2 Earnings?
Southwest Airlines Co. (LUV - Free Report) is scheduled to report second-quarter 2024 results on Jul 25.
Southwest Airlines has surpassed the Zacks Consensus Estimate in two of the preceding four quarters, the average beat being 57.85%. 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.
Q2 Expectations
The Zacks Consensus Estimate for LUV’s second-quarter 2024 revenues is pegged at $7.35 billion, indicating 4.45% year-over-year growth. The top line is likely to have been aided by healthy leisure demand and continued yield strength.
Backed by this uptick, LUV expects its second-quarter capacity or available seat miles (ASMs) to improve 8-9% from the year-ago reported figure. For third-quarter 2024, LUV anticipates capacity to increase in the low-single digits, and for the fourth quarter of 2024, LUV expects capacity to decrease in the low to mid-single digits. For 2024, management has reaffirmed its capacity expectation to improve 4% on a year-over-year basis.
LUV’s solid operational performance so far is evident from its fewer cancelations. The completion factor quarter to date has averaged almost 99.5% amid challenging weather in Texas and Florida.
On the contrary, LUV now expects its second-quarter revenue per available seat mile (RASM) to decline in the range of 4%-4.5% year over year, which marks a deterioration from the previous guidance of 1.5% to 3.5% decline. The downside in the RASM expectations was owing to the difficulties faced by LUV in adjusting its revenues to current booking patterns and consumer spending trends.
Cost per available seat mile (CASM, excluding fuel, oil and profit-sharing expenses, and special items) is still anticipated to increase in the range of 6.5-7.5% in the second quarter from the comparable period in 2023. Economic fuel costs per gallon are still expected to be between $2.70 and $2.80.
Interest expense is now expected to be $63 million (prior view: $62 million) in the second quarter.
Higher expenses and interest expense are likely to weigh on LUV’s bottom line. Notably, the Zacks Consensus Estimate for LUV’s second-quarter 2024 earnings has been revised downward by 36.2% in the past 90 days to 51 cents per share. Moreover, the consensus mark implies a 53.21% decline from the year-ago actuals.
What Our Model Says
Our proven model does not conclusively predict 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. But that’s not the case here. 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 -2.71% and a Zacks Rank #4 (Sell).
Southwest Airlines Co. Price and EPS Surprise
Southwest Airlines Co. price-eps-surprise | Southwest Airlines Co. Quote
Highlights of Q1
Southwest Airlines reported first-quarter 2024 loss of 36 cents per share, which was wider than the Zacks Consensus Estimate loss of 34 cents. In the year-ago reported quarter, LUV incurred a loss of 27 cents per share.
Revenues of $6.329 billion missed the Zacks Consensus Estimate of $6.451 billion but improved 10.9% year over year. The uptick was owing to solid demand trends, coupled with record first-quarter passenger and ancillary revenues, passengers carried, and new Rapid Rewards Members.
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 on second-quarter 2024 earnings.
Copa Holdings(CPA - Free Report) has an Earnings ESP of +2.52% and carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
CPA will release results on Aug 7. Upbeat air-travel demand is likely to have aided the second-quarter performance.
The Zacks Consensus Estimate for CPA’s second-quarter 2024 earnings has been revised downward by 16.3% in the past 60 days to $2.98 per share. CPA has an impressive earnings surprise history, having surpassed the Zacks Consensus Estimate in each of the preceding four quarters, the average beat being 20.19%.
Expeditors International of Washington (EXPD - Free Report) has an Earnings ESP of +3.03% and a Zacks Rank #2. EXPD is scheduled to report second-quarter 2024 earnings on Aug 6. 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 second-quarter earnings has been revised 1.68% upward in the last 60 days. EXPD surpassed the Zacks Consensus Estimate for earnings in only one of the preceding four quarters and missed thrice, the average miss being 3.44%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.