Investors have shared their concerns that the industry will face political uncertainty and fuel costs as a major hindrance to profitability in the next quarter. However, traders believe that on the back of a thriving economy, the air travel demand could increase and remained the major catalyst for driving passenger revenues.
The oil prices have fallen nearly 40% in the fourth quarter and this could enhance the bottom line as operating expenses are likely to be lesser. However, on a year-over-year basis, the fuel price estimate for the fourth quarter remained at a pretty high level. Investors will keenly await for reports from Southwest Airlines as it is America’s largest low-cost carrier.
Related: Southwest Airlines Q3 2018 Earnings Transcript
Analysts expect Southwest Airlines to post earnings of $1.07 per share on revenue of $5.67 billion for the fourth quarter. In comparison, during the previous year quarter, the company reported a profit of $0.77 per share on revenue of $5.27 billion. Majority of the analysts recommended a “strong buy” or “buy” rating while expecting the stock to reach $60.78 in the next 52 weeks.
The results for the fourth quarter will be benefited by higher revenues as well as a decline in the federal income taxes. The outlook was lowered citing to a lower than expected improvement in the domestic market. It is expected that a strong travel demand would boost the carrier’s passenger revenues.
Shares of Southwest opened higher on Wednesday and is trading in the green territory. The stock has fallen over 22% in the past year and over 11% in the past three months.