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Southwest Airlines (LUV) Dips More Than Broader Markets: What You Should Know

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In the latest trading session, Southwest Airlines (LUV - Free Report) closed at $45.21, marking a -1.57% move from the previous day. This change lagged the S&P 500's daily loss of 1.26%. Elsewhere, the Dow lost 0.8%, while the tech-heavy Nasdaq lost 0.44%.

Prior to today's trading, shares of the airline had gained 23.5% over the past month. This has outpaced the Transportation sector's loss of 0.51% and the S&P 500's gain of 6.07% in that time.

Wall Street will be looking for positivity from Southwest Airlines as it approaches its next earnings report date. This is expected to be April 28, 2022. The company is expected to report EPS of -$0.45, up 73.84% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $4.58 billion, up 123.34% from the prior-year quarter.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $1.09 per share and revenue of $21.66 billion. These totals would mark changes of +150.7% and +37.18%, respectively, from last year.

Investors might also notice recent changes to analyst estimates for Southwest Airlines. These recent revisions tend to reflect the evolving nature of short-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. 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.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. The Zacks Consensus EPS estimate has moved 3.6% lower within the past month. Southwest Airlines currently has a Zacks Rank of #3 (Hold).

Digging into valuation, Southwest Airlines currently has a Forward P/E ratio of 42.04. For comparison, its industry has an average Forward P/E of 21.08, which means Southwest Airlines is trading at a premium to the group.

Investors should also note that LUV has a PEG ratio of 7.01 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. Transportation - Airline stocks are, on average, holding a PEG ratio of 7.01 based on yesterday's closing prices.

The Transportation - Airline industry is part of the Transportation sector. This group has a Zacks Industry Rank of 190, putting it in the bottom 25% 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.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.


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