What's in Store for Southwest Airlines (LUV) in Q3 Earnings?
Southwest Airlines Co. (LUV) is scheduled to report third-quarter 2023 results on Oct 26.
Southwest Airlines missed the Zacks Consensus Estimate in two of the preceding four quarters, the average miss being 293.09%. However, the company has outperformed the Zacks Consensus Estimate in the remaining two quarters.
Let’s see how things have shaped up for Southwest Airlines this earnings season.
Q3 Expectations
The Zacks Consensus Estimate for LUV’s third-quarter 2023 revenues is pegged at $6.57 billion, indicating 5.63% year-over-year growth. The top line is likely to have been aided by a solid recovery in domestic and leisure air-travel demand and an improvement in passenger revenues.
On the flip side, escalating fuel prices represent a concern. For third-quarter 2023, economic fuel costs per gallon are expected to be between $2.55 and $2.65.
Apart from an increase in fuel costs, a rise in labor and airport costs is also likely to have dented bottom-line growth, resulting in a spike in operating expenses. Due to an increase in labor and airport costs, LUV expects consolidated unit cost or cost per available seat mile, excluding fuel, oil and profit-sharing expenses, and special items, to increase 3.5-6.5% in the third quarter of 2023 from the comparable period in 2022. Our estimate indicates an increase of 5.3% from third-quarter 2022 actuals. Notably, the Zacks Consensus Estimate for third-quarter earnings has been revised 57.7% downward over the past 90 days.
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 -11.11% and a Zacks Rank #5 (Strong Sell).
Southwest Airlines Co. Price and EPS Surprise
Southwest Airlines Co. price-eps-surprise | Southwest Airlines Co. Quote
Highlights of Q2
Southwest Airlines reported second-quarter 2023 earnings of $1.09 per share, which outpaced the Zacks Consensus Estimate of $1.08 but declined 16.2% on a year-over-year basis.
Revenues of $7,037 million beat the Zacks Consensus Estimate of $6,988.7 million and improved 4.6% year over year on the back of solid leisure demand.
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 third-quarter 2023 earnings:
Ryder System, Inc. R has an Earnings ESP of +5.48% and a Zacks Rank #1. R will release results on Oct 25. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for R’s third-quarter 2023 earnings has been revised upward by 13.8% in the past 90 days. R delivered a trailing four-quarter earnings surprise of 11.20%, on average.
Shares of R have gained 21.6% year to date.
Golar LNG Limited GLNG has an Earnings ESP of +18.00% and a Zacks Rank #3. GLNG will release results on Nov 21.
GLNG has an expected earnings growth rate of 13.64% for third-quarter 2023. GLNG delivered a trailing four-quarter earnings surprise of 24.04%, on average.
The Zacks Consensus Estimate for GLNG’s third-quarter 2023 revenues is pegged at $68.41 million, indicating growth of 0.74% year over year.
Copa Holdings CPA has an Earnings ESP of +4.60% and a Zacks Rank #3. CPA is scheduled to report third-quarter 2023 earnings on Nov 15.
We expect upbeat air-travel demand to have aided CPA’s third-quarter performance. CPA has an impressive earnings surprise history, having surpassed the Zacks Consensus Estimate in each of the preceding four quarters, the average beat being 15.13%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
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Southwest Airlines Co. (LUV) : Free Stock Analysis Report
Ryder System, Inc. (R) : Free Stock Analysis Report
Copa Holdings, S.A. (CPA) : Free Stock Analysis Report
Golar LNG Limited (GLNG) : Free Stock Analysis Report
