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Shares of Southwest Airlines Co. (LUV - Free Report) have lost 22.2% so far this year, underperforming its industry's decline of 11.1%.
Why the Lackluster Price Performance?
Southwest Airlines has faced multiple headwinds this year. In April, a passenger on its flight (1380) died due to the mid-air engine explosion. This incident adversely impacted travel demand at Southwest Airlines, resulting in soft bookings.
Moreover, Southwest Airlines, like its fellow-airline operators Delta Air Lines (DAL - Free Report) , American Airlines Group Inc. (AAL - Free Report) and JetBlue Airways Corp. (JBLU - Free Report) , has been hit hard by the rise in oil prices.
This low-cost carrier issued a lackluster view for second-quarter unit revenues due to weak bookings and rising fuel costs. The company expects operating revenue per available seat mile (RASM) to decline around 3% year over year (the earlier guidance had called for a decline in the 1-3% range).
With fuel prices on the rise, the Dallas-based carrier trimmed its capacity (measured in available seat mile or ASMs) growth view. It now anticipates second-quarter capacity to increase approximately 3.5%. Earlier, the company had called for 3.5-4% growth in the metric.
Additionally, the company projects ASM in the low 4% range compared with its prior forecast in the low 5% range. Also, for the latter half of the year, ASM is anticipated to expand approximately 6% year over year, lower than its earlier view of a rise in the low 7% range.
Other Unfavorable Readings
The Zacks Consensus Estimate for second-quarter and full-year 2018 earnings moved south 14.7% and 9%, respectively, in the last 60 days. This reflects investor’s pessimism surrounding the stock.
Furthermore, the stock has a VGM Score of C, which highlights its unattractiveness. Here V stands for Value, G for Growth and M for Momentum and the score is a weighted combination of these three scores.
Such a score allows investors to eliminate the negative aspects of stocks and select winners. However, it is important to keep in mind that each Style Score will carry a different weight while arriving at a VGM Score.
Undoubtedly, the above negatives substantiate the company’s Zacks Rank #5 (Strong Sell).
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It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6% and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
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Southwest Airlines (LUV) Stock Declines 22% YTD: Here's Why
Shares of Southwest Airlines Co. (LUV - Free Report) have lost 22.2% so far this year, underperforming its industry's decline of 11.1%.
Why the Lackluster Price Performance?
Southwest Airlines has faced multiple headwinds this year. In April, a passenger on its flight (1380) died due to the mid-air engine explosion. This incident adversely impacted travel demand at Southwest Airlines, resulting in soft bookings.
Moreover, Southwest Airlines, like its fellow-airline operators Delta Air Lines (DAL - Free Report) , American Airlines Group Inc. (AAL - Free Report) and JetBlue Airways Corp. (JBLU - Free Report) , has been hit hard by the rise in oil prices.
This low-cost carrier issued a lackluster view for second-quarter unit revenues due to weak bookings and rising fuel costs. The company expects operating revenue per available seat mile (RASM) to decline around 3% year over year (the earlier guidance had called for a decline in the 1-3% range).
With fuel prices on the rise, the Dallas-based carrier trimmed its capacity (measured in available seat mile or ASMs) growth view. It now anticipates second-quarter capacity to increase approximately 3.5%. Earlier, the company had called for 3.5-4% growth in the metric.
Additionally, the company projects ASM in the low 4% range compared with its prior forecast in the low 5% range. Also, for the latter half of the year, ASM is anticipated to expand approximately 6% year over year, lower than its earlier view of a rise in the low 7% range.
Other Unfavorable Readings
The Zacks Consensus Estimate for second-quarter and full-year 2018 earnings moved south 14.7% and 9%, respectively, in the last 60 days. This reflects investor’s pessimism surrounding the stock.
Furthermore, the stock has a VGM Score of C, which highlights its unattractiveness. Here V stands for Value, G for Growth and M for Momentum and the score is a weighted combination of these three scores.
Such a score allows investors to eliminate the negative aspects of stocks and select winners. However, it is important to keep in mind that each Style Score will carry a different weight while arriving at a VGM Score.
Undoubtedly, the above negatives substantiate the company’s Zacks Rank #5 (Strong Sell).
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6% and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>