Southwest Airlines Beats on EPS But GAAP Results Lag

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Southwest Airlines (NYS: LUV) reported earnings on Jan. 24. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Dec. 31 (Q4), Southwest Airlines met expectations on revenues and beat expectations on earnings per share.

Compared to the prior-year quarter, revenue grew slightly and GAAP earnings per share dropped significantly.


Margins dropped across the board.

Revenue details
Southwest Airlines booked revenue of $4.17 billion. The 11 analysts polled by S&P Capital IQ predicted a top line of $4.21 billion on the same basis. GAAP reported sales were 1.6% higher than the prior-year quarter's $4.11 billion.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
EPS came in at $0.09. The 16 earnings estimates compiled by S&P Capital IQ predicted $0.08 per share. GAAP EPS of $0.11 for Q4 were 45% lower than the prior-year quarter's $0.20 per share.

Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 20.7%, 80 basis points worse than the prior-year quarter. Operating margin was 2.5%, 200 basis points worse than the prior-year quarter. Net margin was 1.9%, 180 basis points worse than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $4.11 billion. On the bottom line, the average EPS estimate is $0.08.

Next year's average estimate for revenue is $18.01 billion. The average EPS estimate is $0.98.

Investor sentiment
The stock has a three-star rating (out of five) at Motley Fool CAPS, with 1,504 members out of 1,757 rating the stock outperform, and 253 members rating it underperform. Among 374 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 327 give Southwest Airlines a green thumbs-up, and 47 give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Southwest Airlines is outperform, with an average price target of $11.82.

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The article Southwest Airlines Beats on EPS But GAAP Results Lag originally appeared on Fool.com.

Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor ofMotley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. TMFDisclosureHere

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