SAN DIEGO, CALIFORNIA - APRIL 20: A Southwest Airlines Boeing 737 airplane approaches San Diego ... More International Airport for a landing from Oakland on April 20, 2025 in San Diego, California. (Photo by Kevin Carter/Getty Images) Getty Images Southwest Airlines is set to publish its earnings report on Thursday, April 24, 2025. The company currently has a market capitalization of $15 billion. Over the last twelve months, Southwest recorded $27 billion in revenue, delivered $321 million in operating profit, and posted a net income of $465 million. Looking ahead, consensus forecasts call for a loss of $0.19 per share on $6.4 billion in sales for the next report. This is compared with a loss of $0.36 per share on $6.33 billion in sales in the same period a year ago. For event-driven traders, grasping historical post-earnings stock movements can be valuable, irrespective of how the upcoming results and outlook affect the share price. This analysis presents two potential strategies: Pre-Earnings Positioning: By analyzing historical data, traders can evaluate the likelihood of various post-earnings outcomes and position themselves strategically ahead of the announcement. Post-Earnings Trading: Alternatively, traders can examine the correlation between short-term and medium-term returns after past earnings releases. This method entails entering a trade one day following the earnings announcement. Over the past five years, Southwest has posted a negative one-day return after earnings in 70% of cases. The median decline in these instances was –2.7%, while the largest single-day drop reached –8.9%. MORE FOR YOU Trump Pours Cold Water On Millionaire Tax Floated By Some Republicans NYT Mini Crossword Extra Hints, Clues, Answers For Thursday, April 24 Tensions Loom At Billionaire Kwek Family’s CDL As Sparks Fly At Shareholders’ Meeting Historical Odds of Positive Post-Earnings Returns for Southwest Airlines Key observations on one-day (1D) post-earnings returns: Over the last five years, there are 20 earnings instances recorded, with 6 positive and 14 negative one-day (1D) returns. In total, positive 1D returns occurred about 30% of the time. However, when focusing on the most recent three years instead of five, this percentage falls to 25%. The median of the 6 positive returns is 2.4%, and the median of the 14 negative returns is –2.7%. Additional statistics for observed 5-day (5D) and 21-day (21D) post-earnings returns are summarized in the table below. LUV 1D, 5D, and 21D post-earnings returns Correlation of 1D, 5D, and 21D Post-Earnings Returns An arguably less risky approach (though not effective if correlations are low) is to analyze the relationship between short-term and medium-term post-earnings returns, identify the pair with the strongest correlation, and apply the corresponding trade. For instance, if 1D and 5D returns exhibit the highest correlation, a trader might go “long” for five days following a positive 1D post-earnings return. Below is some correlation data based on both five-year and three-year (more recent) histories. Note that “1D_5D” denotes the correlation between 1D post-earnings returns and the subsequent 5D returns. LUV Correlation Between 1D, 5D and 21D Historical Returns Correlation With Peer Earnings Peer performance can sometimes influence a stock’s post-earnings reaction; pricing effects may even start before the announcement. Below is historical data comparing Southwest Airlines’ post-earnings performance with peers that reported earnings immediately before Southwest Airlines. For consistency, peer returns also reflect one-day (1D) post-earnings returns. LUV Correlation With Peer Earnings Preserve & Grow Wealth With Risk-Focused Quality Portfolios Learn more about Trefis RV strategy that has outperformed its all-cap stocks benchmark (combination of all 3, the S&P 500, S&P mid-cap, and Russell 2000), to produce strong returns for investors. Separately, if you want upside with a smoother ride than an individual stock like Ford Motor, consider the High Quality portfolio, which has outperformed the S&P, and clocked >91% returns since inception. Editorial StandardsForbes Accolades