Southwest Airlines Beats Analyst Estimates on EPS

Seth Jayson, The Motley Fool
Updated

Southwest Airlines (NYS: LUV) reported earnings on Jan. 19. 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 significantly, and earnings per share grew significantly.

Margins dropped across the board.

Revenue details
Southwest Airlines reported revenue of $4.1 billion. The 10 analysts polled by S&P Capital IQ foresaw revenue of $4.1 billion. Sales were 32% higher than the prior-year quarter's $3.1 billion.

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Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions.

EPS details
Non-GAAP EPS came in at $0.09. The 16 earnings estimates compiled by S&P Capital IQ predicted $0.08 per share on the same basis. GAAP EPS of $0.20 for Q4 were 18% higher than the prior-year quarter's $0.17 per share.

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Source: S&P Capital IQ. Quarterly periods. Figures may be non-GAAP to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 21.5%, 350 basis points worse than the prior-year quarter. Operating margin was 4.5%, 240 basis points worse than the prior-year quarter. Net margin was 3.7%, 50 basis points worse than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $4.0 billion. On the bottom line, the average EPS estimate is $0.07.

Next year's average estimate for revenue is $17.4 billion. The average EPS estimate is $.81.

Investor sentiment
The stock has a three-star rating (out of five) at Motley Fool CAPS, with 1,515 members out of 1,760 rating the stock outperform, and 245 members rating it underperform. Among 377 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 333 give Southwest Airlines a green thumbs-up, and 44 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 $12.18.

At the time thisarticle was published 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. Motley Fool newsletter services have recommended buying shares of Southwest Airlines. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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