Southwest Airlines Prepares for Earnings Release
Southwest Airlines Co. (LUV) is set to announce its fourth-quarter 2024 earnings on January 30.
Check out the latest EPS estimates and surprises on Zacks Earnings Calendar.
The Zacks Consensus Estimate for LUV’s fourth-quarter earnings has risen by 21.6% in the last 90 days, reaching 45 cents per share. This growth implies an increase of 21.62% compared to the same period last year.
Southwest Airlines has outperformed the Zacks Consensus Estimate in three out of the last four quarters, achieving an average beat of 111.62%. However, it missed the estimate once and met it in another quarter.
Let’s explore the factors influencing LUV’s performance this quarter.
Key Factors Impacting LUV’s Performance in Q4
LUV’s fourth-quarter revenue estimate stands at $6.95 billion, reflecting a 1.84% increase year-over-year. This growth is likely driven by solid demand for leisure travel and strong yield performance.
As a result of this uptick, LUV anticipates its revenue per available seat mile (RASM) to grow between 5.5% and 7% year-over-year, an upgrade from the previous forecast of 3.5% to 5.5%. This positive outlook stems from increased industry demand and effective revenue management strategies.
Continued travel demand and successful initiatives, such as optimizing routes and managing capacity, have contributed to the growth in unit revenues. LUV is also implementing cost-cutting measures and modernizing its fleet to enhance profitability.
Conversely, delays in production from Boeing are impacting LUV’s fleet plans. Increased labor and airport expenses, along with higher fuel costs, pose challenges for the airline’s profit margins. For fourth-quarter 2024, LUV expects its costs per available seat mile (CASM), excluding fuel and special items, to rise by 11-13% from the previous year.
The forecast for economic fuel costs per gallon is now between $2.35 and $2.45, up from an earlier estimate of $2.25 to $2.35. Our estimate aligns closely at $2.44. Higher fuel prices are concerning since they constitute a significant expense for airlines.
Our Model’s Prediction for LUV
Based on our model, an earnings beat is likely for Southwest Airlines this quarter. When a company has a positive Earnings ESP alongside a Zacks Rank of #1 (Strong Buy), #2 (Buy), or #3 (Hold), it increases the potential for better-than-expected earnings. Currently, Southwest Airlines has an Earnings ESP of +6.78% and a Zacks Rank of #2.
Performance Trends for Southwest Airlines
Southwest Airlines Co. price-eps-surprise | Southwest Airlines Co. Quote
Overview of Q3 Earnings
In its third quarter of 2024, Southwest Airlines reported earnings of 15 cents per share, surpassing the Zacks Consensus Estimate of 5 cents, although this figure marked a decline of 60.5% from the same quarter last year.
Revenue reached $6.87 billion, exceeding the Zacks Consensus Estimate of $6.79 billion and showing a year-over-year improvement of 5.3%. This increase resulted from strong demand and a record number of passengers flown, as well as higher passenger and ancillary revenues.
Other Stocks Worth Considering
Investors may also want to consider these stocks within the broader Zacks Transportation sector. Our model shows these companies have the potential to exceed earnings expectations in this reporting cycle.
C.H. Robinson (CHRW) holds an Earnings ESP of +5.71% and has a Zacks Rank of #2. It will report its fourth-quarter 2024 earnings on January 29. In the past 90 days, the Zacks Consensus Estimate for earnings has increased by 7.7%. CHRW has beaten the Zacks Consensus Estimate in three of the last four quarters, with an average surprise of 10.3%.
Norfolk Southern Corporation (NSC) currently has an Earnings ESP of +0.80% and a Zacks Rank of #3. This company is also set to release its fourth-quarter results on January 29, with the Zacks Consensus Estimate for earnings reflecting a 32.2% increase in the previous 90 days. NSC has topped the estimates in two of the last four quarters while missing in the other two, delivering an average surprise of 1.58%.
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Southwest Airlines Co. (LUV): Free Stock Analysis Report
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The opinions expressed in this article are those of the author and do not necessarily reflect the views of Nasdaq, Inc.
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