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Southwest Airlines (LUV) Gains But Lags Market: What You Should Know

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Southwest Airlines (LUV - Free Report) closed the most recent trading day at $47.33, moving +1.24% from the previous trading session. This change lagged the S&P 500's 1.49% gain on the day. Meanwhile, the Dow gained 0.69%, and the Nasdaq, a tech-heavy index, added 2.56%.

Coming into today, shares of the airline had gained 2.16% in the past month. In that same time, the Transportation sector lost 1.13%, while the S&P 500 gained 1.44%.

Wall Street will be looking for positivity from LUV as it approaches its next earnings report date. On that day, LUV is projected to report earnings of -$1.62 per share, which would represent a year-over-year decline of 265.31%. Our most recent consensus estimate is calling for quarterly revenue of $2.15 billion, down 62.51% from the year-ago period.

Investors might also notice recent changes to analyst estimates for LUV. Recent revisions tend to reflect the latest near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. The Zacks Consensus EPS estimate remained stagnant within the past month. LUV is currently sporting a Zacks Rank of #3 (Hold).

Looking at its valuation, LUV is holding a Forward P/E ratio of 353.78. This valuation marks a premium compared to its industry's average Forward P/E of 36.36.

Investors should also note that LUV has a PEG ratio of 58.96 right now. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. LUV's industry had an average PEG ratio of 33.58 as of yesterday's close.

The Transportation - Airline industry is part of the Transportation sector. This industry currently has a Zacks Industry Rank of 213, which puts it in the bottom 17% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

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