Southwest Airlines Stock to Report Q4 Earnings: Is a Beat in Store?

Southwest Airlines Co. LUV is scheduled to report fourth-quarter 2025 results on Jan. 28.Southwest Airlines has an encouraging earnings surprise history. The company’s earnings outpaced the Zacks Consensus Estimate in three of the trailing four quarters (missed the mark in the remaining quarter), delivering an average beat of 259.13%. Image Source: Zacks Investment ResearchLet’s see how things have shaped up for Southwest Airlines this earnings season.Factors Likely to Have Influenced LUV’s Q4 PerformanceThe Zacks Consensus Estimate for LUV’s fourth-quarter 2025 revenues is pegged at $7.52 billion, indicating 8.47% growth year over year. Management anticipates fourth-quarter 2025 unit revenues to increase in the range of 1% to 3%, on a year-over-year basis, excluding special items, on capacity up almost 6% year over year. This guidance range assumes demand strength remains at current levels through the end of the quarter. LUV anticipates delivering an all-time quarterly record revenue performance in the fourth quarter.We expect LUV's performance in the to-be-reported quarter to have been boosted by an uptick in total revenues, driven by high passenger revenues, as domestic air-travel demand stabilizes. Upbeat passenger volumes during the Thanksgiving holiday period are likely to have boosted the top-line performance in the to-be-reported quarter. Our estimate for passenger revenues in the to-be-reported quarter indicates a 7.8% increase from fourth-quarter 2024 actual.On the contrary, the Zacks Consensus Estimate for LUV’s fourth-quarter 2025 earnings has been revised downward by 24.66% to 55 cents per share in the past 60 days. Moreover, the consensus mark implies a decline of 1.79% from the year-ago actual.We expect geopolitical uncertainty, tariff-related pressures and persistent inflation to weigh on LUV’s operations. The ongoing economic uncertainties and the resultant reduction in consumer and corporate confidence, along with the effects of the government shutdown, are likely to have hurt the company’s prospects. Image Source: Zacks Investment ResearchEscalated labor and airport costs are also likely to have been high, which would have hurt the company’s bottom-line performance in the December quarter. Despite costs on aircraft fuel decreasing year over year, LUV expects to continue experiencing increased cost pressure from the labor agreements and deals inked with the pilots. We expect operating costs to increase 5.9% in fourth-quarter 2025 from fourth-quarter 2024 actuals, led by the 7.3% rise in salaries and related costs.LUV anticipates fourth-quarter 2025 CASM-X to be in the range of up 1.5-2.5%, or flat to up 1% when excluding the impact of expected book gains from fleet transactions in the fourth quarter of both years, on capacity up almost 6%, all on a year-over-year basis. Unit costs continue to be backed by the continuation of inflationary pressures, including those associated with labor contracts ratified in 2024. LUV remains focused on driving efficiencies to offset overall inflationary cost pressures and achieve its multi-year cost reduction targets.What Our Model Says About LUVOur proven model predicts an earnings beat for Southwest Airlines this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.Southwest Airlines has an Earnings ESP of +7.27% and a Zacks Rank #2 at present.Southwest Airlines Co. Price and EPS Surprise Southwest Airlines Co. price-eps-surprise | Southwest Airlines Co. QuoteHighlights of LUV’s Q3 EarningsSouthwest Airlines reported mixed third-quarter 2025 results, wherein earnings surpassed the Zacks Consensus Estimate, but revenues lagged the same.Quarterly earnings of 11 cents per share beat the Zacks Consensus Estimate of 1 cent but declined 26.7% year over year. Revenues of $6.94 billion missed the Zacks Consensus Estimate of $6.96 billion, but improved 1.1% year over year. Passenger revenues (which accounted for 90.8% of the top line) grew 1% year over year to $6.31 billion. Quarterly results benefited from better-than-anticipated unit revenues and unit costs.Other Stocks to ConsiderHere are a few stocks from the broader Zacks Transportation sector that investors may consider, as our model shows that these have the right combination of elements to beat on earnings this reporting cycle. Canadian National Railway CNI has an Earnings ESP of +0.44% and a Zacks Rank #3 at present, and is scheduled to report fourth-quarter 2025 results on Jan. 30.The Zacks Consensus Estimate for fourth-quarter earnings has been revised upward by 1.43% at $1.42 per share over the past 60 days. CNI’s earnings beat the Zacks Consensus Estimate in two of the preceding four quarters and missed twice in the remaining, the average miss was 0.1%. United Parcel Service UPS has an Earnings ESP of +1.00% and a Zacks Rank #3 at present.  UPS is scheduled to report fourth-quarter 2025 earnings on Jan. 27. You can see the complete list of today’s Zacks #1 Rank stocks here.The Zacks Consensus Estimate for fourth-quarter 2025 earnings has been revised 2.29% upward over the past 60 days. UPS’ earnings beat the Zacks Consensus Estimate in three of the preceding four quarters and missed in the remaining one, the average beat being 11.2%.Zacks' Research Chief Names "Stock Most Likely to Double"Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.This top pick is a little-known satellite-based communications firm. Space is projected to become a trillion dollar industry, and this company's customer base is growing fast. Analysts have forecasted a major revenue breakout in 2025. Of course, all our elite picks aren't winners but this one could far surpass earlier Zacks' Stocks Set to Double like Hims & Hers Health, which shot up +209%.Free: See Our Top Stock And 4 Runners UpWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Southwest Airlines Co. (LUV): Free Stock Analysis Report Canadian National Railway Company (CNI): Free Stock Analysis Report United Parcel Service, Inc. (UPS): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks