Southwest Airlines Co.
) is set to release its second-quarter 2013 results before the
opening bell on Jul 25, 2013.
In the last quarter, the company delivered a 133.33% earnings
surprise. Let's see how things are shaping up for this
Factors to be Considered this Quarter
Southwest Airlines has adopted a number of strategies to increase
revenues and reduce costs over the next three years. These
include fleet restructuring, introduction of various customer
friendly programs, network expansion and capacity management. We
believe that these initiatives will attract customers and
strengthen the company's position in the industry. A healthy
financial profile will likely support its endeavors. However, a
highly competitive environment and regulations imposed by the
federal authority pose major impediments to growth. Moreover,
technological failures and labor troubles are also likely to
weaken the performance of the company.
Our proven model does not conclusively show that Southwest
Airlines is likely to beat the Zacks Consensus Estimate this
quarter. This is because a stock needs to have both a positive
Expected Surprise Prediction (ESP) (Read: Zacks Earnings ESP: A
Better Method) and Zacks Rank #1 (Strong Buy), #2 (Buy) or #3
(Hold) for this to happen. Unfortunately, this is not the case
here as elaborated below.
Negative Zacks ESP
: This is because the Most Accurate Estimate is 38 cents while
the Zacks Consensus Estimate is higher at 39 cents. This leads to
an ESP of -2.56% for Southwest Airlines.
Zacks Rank #3
(Hold): Southwest Airlines's Zacks Rank #3, decreases the
predictive power of ESP.
We caution investors against the stock going into the earnings
announcement, as a Zacks Earnings ESP of -2.56% combined with a
Zacks Rank # 3 lowers the possibility of an earnings surprise.
Other Stocks to Consider
Here are some other companies to consider as our model shows they
have the right combination of elements to post an earnings beat
BOEING CO (BA): Free Stock Analysis Report
GENL DYNAMICS (GD): Free Stock Analysis
SOUTHWEST AIR (LUV): Free Stock Analysis
SPIRIT AIRLINES (SAVE): Free Stock Analysis
To read this article on Zacks.com click here.
The Boeing Company
) has an Earnings ESP of +1.27% and carries a Zacks Rank #2
pirit Airlines, Inc.
) has an Earnings ESP of +3.33% and carries a Zacks Rank #3
General Dynamics Corp.
) has an Earnings ESP of +0.61% and carries a Zacks Rank #3