Southwest Airlines Third Quarter Earnings Sneak Peek

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S&P 500 (NYSE:SPY) component Southwest Airlines (NYSE:LUV) will unveil its latest earnings on Thursday, October 18, 2012. Southwest Airlines is a passenger airline that provides air transportation in the United States.

Southwest Airlines Earnings Preview Cheat Sheet

Wall St. Earnings Expectations: The average estimate of analysts is for profit of 14 cents per share, a decline of 6.7% from the company’s actual earnings for the same quarter a year ago. During the past three months, the average estimate has moved down from 32 cents. Between one and three months ago, the average estimate moved down. It also has dropped from 19 cents during the last month. Analysts are projecting profit to rise by 46.5% compared to last year’s 63 cents.

Past Earnings Performance: The company has beaten estimates the last four quarters and is coming off a quarter where it topped forecasts by 3 cents, reporting net income of 36 cents per share against a mean estimate of profit of 33 cents per share.

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A Look Back: In the second quarter, profit rose 41.6% to $228 million (30 cents a share) from $161 million (21 cents a share) the year earlier, exceeding analyst expectations. Revenue rose 11.6% to $4.62 billion from $4.14 billion.

Stock Price Performance: Between July 19, 2012 and October 12, 2012, the stock price fell 31 cents (-3.4%), from $9.15 to $8.84. The stock price saw one of its best stretches over the last year between August 14, 2012 and August 21, 2012, when shares rose for six straight days, increasing 5% (+45 cents) over that span. It saw one of its worst periods between August 21, 2012 and August 29, 2012 when shares fell for seven straight days, dropping 6% (-57 cents) over that span.

Analyst Ratings: With six analysts rating the stock as a buy, one rating it as a sell and six rating it as a hold, there are indications of a bullish outlook.

Key Stats:

The company enters this earnings announcement with substantial revenue momentum. The company has averaged year-over-year revenue growth of 26.8% over the last four quarters.

Wall St. Revenue Expectations: Analysts predict a rise of 1.4% in revenue from the year-earlier quarter to $4.37 billion.

Balance Sheet Analysis: The company’s current ratio of assets to liabilities came in at 0.92 last quarter. The current ratio is an indication of a firm’s liquidity and ability to meet creditor demands and generally, a ratio less than one could indicate a company may have difficulty meeting current obligations. The company regressed in this liquidity measure from 1.01 in the first quarter to the last quarter driven in part by a decrease in current assets. Current assets decreased 8.4% to $4.69 billion while liabilities rose by 0.7% to $5.08 billion.

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(Company fundamentals by Xignite Financials. Earnings estimates provided by Zacks)

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