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The Zacks Consensus Estimate for the company’s first-quarter loss has narrowed by 37.7% in the past 60 days. The company has an impressive earnings surprise history, having outperformed the Zacks Consensus Estimate in three of the past four quarters while missing the same in one.
Let’s see how things are shaping up for Southwest this earnings season.
With improved air-travel demand, passenger revenues are expected to reflect a significant year-over-year increase in the to-be-reported quarter. The Zacks Consensus Estimate for first-quarter passenger revenues indicates more than 100% jump from the year-ago reported quarter. However, on a sequential basis, passenger revenues are expected to reflect the impact of Omicron-induced woes and inclement weather conditions on travel demand. The consensus mark for passenger revenues hints at an 8.7% decline from the fourth-quarter 2021 reported number.
With air-travel demand continuing to be below the pre-pandemic levels despite improving, Southwest expects first-quarter 2022 operating revenues to decline 8-10% from the first quarter of 2019. The company expects to incur a loss in the period.
Reduced capacity due to suppressed travel demand, as well as costs associated with incentive pays for employees and other expenses related to lower productivity levels are pushing up unit costs for Southwest. This might get reflected in the company’s bottom-line performance. The Zacks Consensus Estimate for cost per available seat miles (CASM or unit costs), excluding fuel and oil expenses, profit sharing, and special items, shows an approximate 10% increase from the fourth-quarter 2021 reported number. The company estimates first-quarter 2022 CASM, excluding fuel and oil expenses, profit sharing, and special items, to increase 17-21% from the comparable period in 2019.
Rising fuel prices, thanks to the Russia-Ukraine war, are likely to have dented LUV’s bottom line in the first quarter. The Zacks Consensus Estimate for first-quarter fuel costs per gallon (inclusive of fuel tax: economic) suggests a 4.4% rise from the fourth-quarter 2021 reported number. The company estimates the same to be between $2.25 and $2.35 ($2.25 reported in fourth-quarter 2021).
Earnings Whispers
The proven Zacks model predicts an earnings beat for Southwest this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of beating estimates. You can see the complete list of today’s Zacks #1 Rank stocks here.
Earnings ESP: Southwest has an Earnings ESP of +30.75% as the Most Accurate Estimate is pegged at a loss of 26 cents, while the Zacks Consensus Estimate is poised at a loss of 38 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Southwest carries a Zacks Rank #3.
Highlights of Q4 Earnings
Southwest reported fourth-quarter 2021 earnings (excluding 3 cents from non-recurring items) of 14 cents per share, which surpassed the Zacks Consensus Estimate of 5 cents. This marked the company’s first profitable quarter after seven consecutive losses since the pandemic began in 2020. Strong holiday travel demand during November and December, as well as well as incremental revenues generated from the company's then-new co-brand credit card agreement, aided Southwest’s fourth-quarter performance. Operating revenues of $5,051 million outperformed the Zacks Consensus Estimate of $5,029 million and also jumped more than 100% year over year.
Other Stocks to Consider
Investors interested in the broader Transportation sector may also consider Old Dominion Freight Line (ODFL - Free Report) and Expeditors International of Washington (EXPD - Free Report) . These companies also possess the right combination of elements to beat on earnings in this reporting cycle.
Old Dominion has an Earnings ESP of +1.14% and a Zacks Rank #3. ODFL is set to release first-quarter 2022 earnings numbers on Apr 27.
Old Dominion’s earnings surpassed the Zacks Consensus Estimate in each of the preceding four quarters, the average beat being 6.5%.
Expeditors has an Earnings ESP of +3.12% and a Zacks Rank #1. EXPD will announce first-quarter 2022 results on May 3.
Expeditors’ earnings also trumped the Zacks Consensus Estimate in each of the trailing four quarters, the average beat being 34.2%.
Image: Bigstock
What's in the Cards for Southwest (LUV) in Q1 Earnings?
Southwest Airlines (LUV - Free Report) is scheduled to report first-quarter 2022 earnings numbers on Apr 28.
The Zacks Consensus Estimate for the company’s first-quarter loss has narrowed by 37.7% in the past 60 days. The company has an impressive earnings surprise history, having outperformed the Zacks Consensus Estimate in three of the past four quarters while missing the same in one.
Let’s see how things are shaping up for Southwest this earnings season.
Southwest Airlines Co. Price and EPS Surprise
Southwest Airlines Co. price-eps-surprise | Southwest Airlines Co. Quote
Factors to Note
With improved air-travel demand, passenger revenues are expected to reflect a significant year-over-year increase in the to-be-reported quarter. The Zacks Consensus Estimate for first-quarter passenger revenues indicates more than 100% jump from the year-ago reported quarter. However, on a sequential basis, passenger revenues are expected to reflect the impact of Omicron-induced woes and inclement weather conditions on travel demand. The consensus mark for passenger revenues hints at an 8.7% decline from the fourth-quarter 2021 reported number.
With air-travel demand continuing to be below the pre-pandemic levels despite improving, Southwest expects first-quarter 2022 operating revenues to decline 8-10% from the first quarter of 2019. The company expects to incur a loss in the period.
Reduced capacity due to suppressed travel demand, as well as costs associated with incentive pays for employees and other expenses related to lower productivity levels are pushing up unit costs for Southwest. This might get reflected in the company’s bottom-line performance. The Zacks Consensus Estimate for cost per available seat miles (CASM or unit costs), excluding fuel and oil expenses, profit sharing, and special items, shows an approximate 10% increase from the fourth-quarter 2021 reported number. The company estimates first-quarter 2022 CASM, excluding fuel and oil expenses, profit sharing, and special items, to increase 17-21% from the comparable period in 2019.
Rising fuel prices, thanks to the Russia-Ukraine war, are likely to have dented LUV’s bottom line in the first quarter. The Zacks Consensus Estimate for first-quarter fuel costs per gallon (inclusive of fuel tax: economic) suggests a 4.4% rise from the fourth-quarter 2021 reported number. The company estimates the same to be between $2.25 and $2.35 ($2.25 reported in fourth-quarter 2021).
Earnings Whispers
The proven Zacks model predicts an earnings beat for Southwest this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of beating estimates. You can see the complete list of today’s Zacks #1 Rank stocks here.
Earnings ESP: Southwest has an Earnings ESP of +30.75% as the Most Accurate Estimate is pegged at a loss of 26 cents, while the Zacks Consensus Estimate is poised at a loss of 38 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Southwest carries a Zacks Rank #3.
Highlights of Q4 Earnings
Southwest reported fourth-quarter 2021 earnings (excluding 3 cents from non-recurring items) of 14 cents per share, which surpassed the Zacks Consensus Estimate of 5 cents. This marked the company’s first profitable quarter after seven consecutive losses since the pandemic began in 2020. Strong holiday travel demand during November and December, as well as well as incremental revenues generated from the company's then-new co-brand credit card agreement, aided Southwest’s fourth-quarter performance. Operating revenues of $5,051 million outperformed the Zacks Consensus Estimate of $5,029 million and also jumped more than 100% year over year.
Other Stocks to Consider
Investors interested in the broader Transportation sector may also consider Old Dominion Freight Line (ODFL - Free Report) and Expeditors International of Washington (EXPD - Free Report) . These companies also possess the right combination of elements to beat on earnings in this reporting cycle.
Old Dominion has an Earnings ESP of +1.14% and a Zacks Rank #3. ODFL is set to release first-quarter 2022 earnings numbers on Apr 27.
Old Dominion’s earnings surpassed the Zacks Consensus Estimate in each of the preceding four quarters, the average beat being 6.5%.
Expeditors has an Earnings ESP of +3.12% and a Zacks Rank #1. EXPD will announce first-quarter 2022 results on May 3.
Expeditors’ earnings also trumped the Zacks Consensus Estimate in each of the trailing four quarters, the average beat being 34.2%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.