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Southwest Airlines (LUV) Gains But Lags Market: What You Should Know
Southwest Airlines (LUV - Free Report) closed at $38.77 in the latest trading session, marking a +1.04% move from the prior day. The stock lagged the S&P 500's daily gain of 1.06%. Elsewhere, the Dow gained 0.71%, while the tech-heavy Nasdaq added 0.18%.
Coming into today, shares of the airline had lost 2.76% in the past month. In that same time, the Transportation sector lost 0.88%, while the S&P 500 lost 1.14%.
Wall Street will be looking for positivity from Southwest Airlines as it approaches its next earnings report date. This is expected to be October 27, 2022. In that report, analysts expect Southwest Airlines to post earnings of $0.54 per share. This would mark year-over-year growth of 334.78%. Our most recent consensus estimate is calling for quarterly revenue of $6.29 billion, up 34.53% from the year-ago period.
LUV's full-year Zacks Consensus Estimates are calling for earnings of $2.26 per share and revenue of $24.18 billion. These results would represent year-over-year changes of +205.12% and +53.12%, respectively.
It is also important to note the recent changes to analyst estimates for Southwest Airlines. These recent revisions tend to reflect the evolving nature of short-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.
Our research shows that these estimate changes are directly correlated with near-term stock prices. 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. Over the past month, the Zacks Consensus EPS estimate has moved 3.07% lower. Southwest Airlines is currently a Zacks Rank #3 (Hold).
Looking at its valuation, Southwest Airlines is holding a Forward P/E ratio of 17.01. This represents a premium compared to its industry's average Forward P/E of 13.56.
Investors should also note that LUV has a PEG ratio of 2.83 right now. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. Transportation - Airline stocks are, on average, holding a PEG ratio of 1.8 based on yesterday's closing prices.
The Transportation - Airline industry is part of the Transportation sector. This industry currently has a Zacks Industry Rank of 100, which puts it in the top 40% of all 250+ industries.
The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.
You can find more information on all of these metrics, and much more, on Zacks.com.