southwest airlines earnings call
Source: Southwest Airlines

Southwest Airlines Posted Lower Q3 Losses, Stock Rose


Oct. 22 2020, Updated 8:21 a.m. ET

On Thursday, Oct. 22, Southwest Airlines reported its financial results for the third quarter. As expected, the airline posted a loss in the third quarter. However, the loss was lower than Wall Street analysts’ expectations. The sales decline wasn’t a surprise. The travel industry has seen a major decline in air travel demand amid the coronavirus pandemic. We’ll discuss what happened in the third quarter and the outlook for 2020.

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southwest airlines q earnings
Source: Southwest Airlines

When did Southwest Airlines report its earnings?

Southwest Airlines reported its third-quarter results on Oct. 22 before the markets opened. The airline company will hold its earnings conference call at 12:30 p.m. ET. Investors can listen to the webcast on the company’s investor relations website.

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Southwest Airlines’ earnings report highlights

In the third quarter, Southwest Airlines reported an adjusted EPS of -$1.99 compared to $1.23 in the third quarter of 2019. The adjusted EPS beat analysts’ average estimate of -$2.35. Southwest Airlines generated sales of $1.79 billion in the third quarter, which was 68.2 percent lower than the third quarter of 2019. The company also beat analysts’ average sales estimate of $1.70 billion.

Southwest Airlines stock price is rising after Q3 results

Southwest Airlines stock was up about 1.1 percent at $40.29 in the pre-market trading session on Oct. 22 as of 7:00 a.m. ET. The stock fell 0.8 percent on Oct. 21 and closed at $39.84 with a market capitalization of $23.5 billion.

Southwest Airlines stock has risen by 2.7 percent in the last five days, while it has fallen by 29.2 percent in the last year. The stock is trading 32.3 percent below its 52-week high of $58.83 and 77.3 percent above its 52-week low of $22.47. Right now, Southwest Airlines doesn’t pay a dividend.

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southwest airlines demand
Source: Southwest Airlines

What is Southwest Airlines stock forecast?

Currently, analysts' stock price forecast for Southwest Airlines is $45.47, which suggests a 14.1 percent upside. The highest target price of $56 implies a 40.6 percent upside, while the lowest target price of $29 suggests a 27.2 percent downside. Among the 19 Wall Street analysts tracking Southwest Airlines, 16 recommend a buy and three recommend a hold. None of the analysts recommend a sell.

Southwest Airlines stock is a good bet for value investors. It's the safest pick among airline stocks amid the coronavirus pandemic. Southwest Airlines’ cash burn has improved significantly from earlier in the year due to a rise in air traffic and cost-cutting for the year. In the third quarter, the average core cash burn was about $16 million per day—down from $23 million in the second quarter. American Airlines and Delta Air Lines spent $100 million and $70 million per day at one point, respectively.


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