What to Expect from Southwest Airlines' Earnings

Shares of Southwest Airlines Co (NYSE:LUV) are 0.4% lower at $30.31, as the airline giant prepares to report third-quarter results before the open on Thursday, Oct. 24. According to Zacks, analysts expect the company to post earnings of 5 cents per share -- an 86.8% decline from a year ago -- on revenue of $6.8 billion.

A look at the last two years shows LUV tends to underperform the day after earnings. In fact, the equity finished lower in six of its last eight post-earnings sessions. Shares averaged a 4.2% gain, regardless of direction, and the options pits are pricing in a slightly larger 6.3% move this time around.

Southwest Airlines stock could benefit from a departure from its historical norms. The equity is still attempting to fill the bear gap it suffered in March, as it bounces from its Aug. 5 dip to $23.58 -- its lowest mark since November 2023. LUV recently reestablished the $30 level as an area of support, and now sports a 5.1% year-to-date lead.

Analysts are bearish ahead of the event, with 12 of 17 covering brokerages rating it a "hold" or worse. Plus, its Schaeffer's put/call open interest ratio (SOIR) of 1.20 stands in the 93rd percentile of readings from the past 12 months, implying a put-bias amongst short-term options traders.