The 10-second takeaway
For the quarter ended Sep. 30 (Q3), Southwest Airlines met expectations on revenues and met expectations on earnings per share.
Compared to the prior-year quarter, revenue was unchanged and GAAP earnings per share grew.
Gross margins dropped, operating margins dropped, net margins expanded.
Southwest Airlines booked revenue of $4.31 billion. The 11 analysts polled by S&P Capital IQ looked for net sales of $4.34 billion on the same basis. GAAP reported sales were 0.0% lower than the prior-year quarter's $4.31 billion.
Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.
EPS came in at $0.13. The 14 earnings estimates compiled by S&P Capital IQ forecast $0.13 per share. GAAP EPS were $0.02 for Q3 versus -$0.18 per share for the prior-year quarter.
Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.
For the quarter, gross margin was 21.4%, 90 basis points worse than the prior-year quarter. Operating margin was 4.5%, 160 basis points worse than the prior-year quarter. Net margin was 0.4%, 360 basis points better than the prior-year quarter.
Next quarter's average estimate for revenue is $4.23 billion. On the bottom line, the average EPS estimate is $0.09.
Next year's average estimate for revenue is $17.18 billion. The average EPS estimate is $0.55.
The stock has a three-star rating (out of five) at Motley Fool CAPS, with 1,509 members out of 1,765 rating the stock outperform, and 256 members rating it underperform. Among 350 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 295 give Southwest Airlines a green thumbs-up, and 55 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 $11.49.
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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 of Motley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. The Motley Fool has no positions in the stocks mentioned above. Motley Fool newsletter services recommend 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.