Southwest Airlines Earnings: Flies Above Wall Street Profit View

Southwest Airlines Co. (NYSE:LUV) delivered a profit and beat Wall Street’s expectations, BUT came up short on beating the revenue expectation. The revenue miss is a negative sign to shareholders seeking high growth out of the company. Shares are up 1.94%.

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Southwest Airlines Co. Earnings Cheat Sheet

Results: Net income decreased -48.68% to $78 million (9 cents per diluted share) in the quarter versus a net gain of $152 million in the year-earlier quarter.

Revenue: Rose 1.51% to $4.17 billion from the year-earlier quarter.

Actual vs. Wall St. Expectations: Southwest Airlines Co. reported adjusted net income of 9 cents per share. By that measure, the company beat the mean analyst estimate of $0.08. It missed the average revenue estimate of $4.21 billion.

Quoting Management: Gary C. Kelly, Chairman of the Board, President, and Chief Executive Officer, stated, “Our fourth quarter 2012 operating revenues were a fourth quarter record $4.2 billion, bringing full year 2012 operating revenues to more than $17 billion.  Our strong fourth quarter 2012 operating revenue performance was driven by record yields, continued high load factors, and an impressive freight revenue performance…

…As with the full year profits, these strong revenues were achieved despite the transitional state of the AirTran route network.  While there was much change in 2012, significant optimization efforts are planned in 2013 for the AirTran network.  As we enter 2013, bookings and revenue trends, thus far, suggest a year-over-year improvement in January 2013 passenger unit revenues in the two to three percent range. While the effect of U.S. tax increases on the domestic economy remains uncertain, bookings for the remainder of first quarter, thus far, are strong.”

Key Stats:

Revenue decreased 3.23% from $4.31 billion in the previous quarter. Net income increased 387.5% from $16 million in the previous quarter.

Looking Forward: Analysts have a more positive outlook for the company’s next-quarter performance. Over the past three months, the average estimate for next quarter’s earnings has risen from a profit of $0.05 to a profit $0.07. For the current year, the average estimate has moved down from a profit of $0.58 to a profit of $0.53 over the last ninety days.

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(Company fundamentals provided by Xignite Financials.)