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Southwest Airlines (LUV) Registers a Bigger Fall Than the Market: Important Facts to Note

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Southwest Airlines (LUV - Free Report) closed at $28.48 in the latest trading session, marking a -1.39% move from the prior day. The stock trailed the S&P 500, which registered a daily loss of 0.57%. At the same time, the Dow added 0.07%, and the tech-heavy Nasdaq lost 1.64%.

Prior to today's trading, shares of the airline had gained 5.79% over the past month. This has outpaced the Transportation sector's gain of 4.57% and the S&P 500's gain of 4% in that time.

The upcoming earnings release of Southwest Airlines will be of great interest to investors. The company's earnings report is expected on January 25, 2024. In that report, analysts expect Southwest Airlines to post earnings of $0.14 per share. This would mark year-over-year growth of 136.84%. At the same time, our most recent consensus estimate is projecting a revenue of $6.75 billion, reflecting a 9.34% rise from the equivalent quarter last year.

Additionally, investors should keep an eye on any recent revisions to analyst forecasts for Southwest Airlines. These revisions typically reflect the latest short-term business trends, which can change frequently. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

The Zacks Rank system, running from #1 (Strong Buy) to #5 (Strong Sell), holds an admirable track record of superior performance, independently audited, with #1 stocks contributing an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 0.2% lower. Southwest Airlines is currently sporting a Zacks Rank of #3 (Hold).

In terms of valuation, Southwest Airlines is presently being traded at a Forward P/E ratio of 16.67. This represents a premium compared to its industry's average Forward P/E of 8.34.

Meanwhile, LUV's PEG ratio is currently 0.99. Comparable to the widely accepted P/E ratio, the PEG ratio also accounts for the company's projected earnings growth. LUV's industry had an average PEG ratio of 0.39 as of yesterday's close.

The Transportation - Airline industry is part of the Transportation sector. This industry, currently bearing a Zacks Industry Rank of 93, finds itself in the top 37% echelons of all 250+ industries.

The Zacks Industry Rank assesses the strength of our separate industry groups by calculating the average Zacks Rank of the individual stocks contained within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Keep in mind to rely on Zacks.com to watch all these stock-impacting metrics, and more, in the succeeding trading sessions.


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