We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
LUV has an impressive earnings surprise history, having outperformed the Zacks Consensus Estimate in each of the preceding four quarters, the average beat being 52.95%.
Let’s see how things have shaped up for LUV this earnings season.
Q3 Expectations
The Zacks Consensus Estimate for LUV’s third-quarter 2022 revenues is pegged at $6.23 billion, indicating 33.1% growth year over year. 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.
Moreover, LUV’s bullish top-line guidance is also encouraging. For the third quarter, Southwest anticipates 9-11% total operating revenue growth from the September-end quarter of 2019. The prior-mentioned growth rate was 8-12%, which was provided during the company’s second-quarter 2022 earnings release on Jul 28.
On the flip side, escalating fuel prices remain a concern. LUV expects economic fuel costs per gallon are expected to be $3.25-$3.35. The Zacks Consensus Estimate for third-quarter fuel costs per gallon (inclusive of fuel tax: economic) stands at $3.29, suggesting a 61.3% rise from the year-ago reported number.
Apart from the rise in fuel costs, increases in labor and airport costs are also likely to have weighed on bottom-line growth. Due to the rise in labor and airport costs, as well as lower productivity levels, LUV expects consolidated unit cost or cost per available seat mile excluding fuel, oil and profit-sharing expenses, and special items, to increase 12-15% in the to-be-reported quarter from the comparable period in 2019. High capex has been a worrisome factor.
Meanwhile, softness in business travel remains a concern. Managed business revenues declined roughly 26% and 32% in July and August from comparable 2019 levels. As a result, LUV now expects third-quarter 2022 managed business revenues to decline in the 26-28% band, compared with the previous 17-21% range.
Notably, the Zacks Consensus Estimate for LUV’s third-quarter 2022 earnings has been revised downward by 57.3% in the past 90 days to 41 cents per share.
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, which is the case here, as you can see below. 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 +3.09% and a Zacks Rank #3.
Highlights of Q2
LUV's second-quarter 2022 earnings of $1.30 outpaced the Zacks Consensus Estimate of $1.17. Moreover, the bottom line improved by more than 100% year over year. Operating revenues of $6,728 million outperformed the Zacks Consensus Estimate of $6,719.1 million and jumped 67.9% 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 too have the right combination of elements to beat on third-quarter 2022 earnings:
CPA has an expected earnings growth rate of more than 100% for the current year. CPA delivered a trailing four-quarter earnings surprise of 174.22%, on average.
JetBlue Airways (JBLU - Free Report) has an Earnings ESP of +1.67% and a Zacks Rank #3. JBLU will release results on Oct 25.
JBLU has an expected earnings growth rate of 67.73% for the current year.
Shares of JBLU have lost 55.5% over the past year.
United Parcel Service, Inc. (UPS - Free Report) has an Earnings ESP of +0.60% and a Zacks Rank #3. UPS will release results on Oct 25.
United Parcel has an expected earnings growth rate of 5.8% for the current year. UPS delivered a trailing four-quarter earnings surprise of 8.51%, on average.
UPS has a long-term earnings growth rate of 8.87%.
Image: Bigstock
Is a Beat in Store for Southwest Airlines (LUV) in Q3 Earnings?
Southwest Airlines Co. (LUV - Free Report) is scheduled to report third-quarter 2022 results on Oct 27, before market open.
LUV has an impressive earnings surprise history, having outperformed the Zacks Consensus Estimate in each of the preceding four quarters, the average beat being 52.95%.
Southwest Airlines Co. Price and EPS Surprise
Southwest Airlines Co. price-eps-surprise | Southwest Airlines Co. Quote
Let’s see how things have shaped up for LUV this earnings season.
Q3 Expectations
The Zacks Consensus Estimate for LUV’s third-quarter 2022 revenues is pegged at $6.23 billion, indicating 33.1% growth year over year. 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.
Moreover, LUV’s bullish top-line guidance is also encouraging. For the third quarter, Southwest anticipates 9-11% total operating revenue growth from the September-end quarter of 2019. The prior-mentioned growth rate was 8-12%, which was provided during the company’s second-quarter 2022 earnings release on Jul 28.
On the flip side, escalating fuel prices remain a concern. LUV expects economic fuel costs per gallon are expected to be $3.25-$3.35. The Zacks Consensus Estimate for third-quarter fuel costs per gallon (inclusive of fuel tax: economic) stands at $3.29, suggesting a 61.3% rise from the year-ago reported number.
Apart from the rise in fuel costs, increases in labor and airport costs are also likely to have weighed on bottom-line growth. Due to the rise in labor and airport costs, as well as lower productivity levels, LUV expects consolidated unit cost or cost per available seat mile excluding fuel, oil and profit-sharing expenses, and special items, to increase 12-15% in the to-be-reported quarter from the comparable period in 2019. High capex has been a worrisome factor.
Meanwhile, softness in business travel remains a concern. Managed business revenues declined roughly 26% and 32% in July and August from comparable 2019 levels. As a result, LUV now expects third-quarter 2022 managed business revenues to decline in the 26-28% band, compared with the previous 17-21% range.
Notably, the Zacks Consensus Estimate for LUV’s third-quarter 2022 earnings has been revised downward by 57.3% in the past 90 days to 41 cents per share.
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, which is the case here, as you can see below. 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 +3.09% and a Zacks Rank #3.
Highlights of Q2
LUV's second-quarter 2022 earnings of $1.30 outpaced the Zacks Consensus Estimate of $1.17. Moreover, the bottom line improved by more than 100% year over year. Operating revenues of $6,728 million outperformed the Zacks Consensus Estimate of $6,719.1 million and jumped 67.9% 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 too have the right combination of elements to beat on third-quarter 2022 earnings:
Copa Holdings (CPA - Free Report) has an Earnings ESP of +0.26% and a Zacks Rank #2. CPA will release results on Nov 16. You can see the complete list of today’s Zacks #1 Rank stocks here.
CPA has an expected earnings growth rate of more than 100% for the current year. CPA delivered a trailing four-quarter earnings surprise of 174.22%, on average.
JetBlue Airways (JBLU - Free Report) has an Earnings ESP of +1.67% and a Zacks Rank #3. JBLU will release results on Oct 25.
JBLU has an expected earnings growth rate of 67.73% for the current year.
Shares of JBLU have lost 55.5% over the past year.
United Parcel Service, Inc. (UPS - Free Report) has an Earnings ESP of +0.60% and a Zacks Rank #3. UPS will release results on Oct 25.
United Parcel has an expected earnings growth rate of 5.8% for the current year. UPS delivered a trailing four-quarter earnings surprise of 8.51%, on average.
UPS has a long-term earnings growth rate of 8.87%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.