Back to top

Image: Bigstock

Southwest Airlines (LUV) Gains As Market Dips: What You Should Know

Read MoreHide Full Article

Southwest Airlines (LUV - Free Report) closed at $32.45 in the latest trading session, marking a +1.22% move from the prior day. This move outpaced the S&P 500's daily loss of 0.01%. At the same time, the Dow lost 0.23%, and the tech-heavy Nasdaq gained 0.97%.

Prior to today's trading, shares of the airline had gained 3.29% over the past month. This has lagged the Transportation sector's gain of 4.08% and the S&P 500's gain of 6.23% in that time.

Southwest Airlines will be looking to display strength as it nears its next earnings release, which is expected to be April 27, 2023. On that day, Southwest Airlines is projected to report earnings of -$0.21 per share, which would represent year-over-year growth of 34.38%. Meanwhile, our latest consensus estimate is calling for revenue of $5.74 billion, up 22.28% from the prior-year quarter.

LUV's full-year Zacks Consensus Estimates are calling for earnings of $2.68 per share and revenue of $27.11 billion. These results would represent year-over-year changes of +131.03% and +13.83%, respectively.

Investors should also note any recent changes to analyst estimates for Southwest Airlines. Recent revisions tend to reflect the latest near-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. Within the past 30 days, our consensus EPS projection has moved 0.41% higher. Southwest Airlines is holding a Zacks Rank of #3 (Hold) right now.

Looking at its valuation, Southwest Airlines is holding a Forward P/E ratio of 11.97. Its industry sports an average Forward P/E of 9.68, so we one might conclude that Southwest Airlines is trading at a premium comparatively.

Meanwhile, LUV's PEG ratio is currently 0.38. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. Transportation - Airline stocks are, on average, holding a PEG ratio of 0.36 based on yesterday's closing prices.

The Transportation - Airline industry is part of the Transportation sector. This group has a Zacks Industry Rank of 32, putting it in the top 13% 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.

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


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


Southwest Airlines Co. (LUV) - free report >>

Published in