Adage Capital Partners GP L.L.C. Purchases New Stake in Southwest Airlines Co. $LUV

Key Points

• Adage Capital Partners GP L.L.C. has acquired a new stake in Southwest Airlines, purchasing 540,877 shares valued at approximately $18.16 million, owning around 0.09% of the company.
• Southwest Airlines has announced a quarterly dividend of $0.18 per share, with a yield of 2.3% and a payout ratio of 109.09%.
• The airline's stock recently reported a miss in earnings with $0.43 EPS for the quarter, falling short of expectations and experiencing a revenue decline compared to the previous year.

Adage Capital Partners GP L.L.C. bought a new stake in Southwest Airlines Co. (NYSE:LUV - Free Report) in the first quarter, according to the company in its most recent disclosure with the Securities and Exchange Commission (SEC). The firm bought 540,877 shares of the airline's stock, valued at approximately $18,163,000. Adage Capital Partners GP L.L.C. owned approximately 0.09% of Southwest Airlines at the end of the most recent quarter.

A number of other hedge funds have also added to or reduced their stakes in the business. Primecap Management Co. CA grew its position in Southwest Airlines by 1.6% in the first quarter. Primecap Management Co. CA now owns 49,688,308 shares of the airline's stock valued at $1,668,533,000 after purchasing an additional 788,255 shares in the last quarter. Jacobs Levy Equity Management Inc. grew its position in Southwest Airlines by 66.0% in the fourth quarter. Jacobs Levy Equity Management Inc. now owns 6,014,828 shares of the airline's stock valued at $202,219,000 after purchasing an additional 2,391,495 shares in the last quarter. Charles Schwab Investment Management Inc. grew its position in Southwest Airlines by 3.9% in the first quarter. Charles Schwab Investment Management Inc. now owns 3,602,939 shares of the airline's stock valued at $120,987,000 after purchasing an additional 136,410 shares in the last quarter. Sound Shore Management Inc. CT grew its position in Southwest Airlines by 12.7% in the first quarter. Sound Shore Management Inc. CT now owns 2,857,308 shares of the airline's stock valued at $95,948,000 after purchasing an additional 321,258 shares in the last quarter. Finally, Nuveen LLC bought a new position in Southwest Airlines in the first quarter valued at $50,433,000. Institutional investors own 80.82% of the company's stock.

Wall Street Analysts Forecast Growth

A number of research analysts recently weighed in on the stock. Jefferies Financial Group raised shares of Southwest Airlines from an "underperform" rating to a "hold" rating and raised their target price for the company from $24.00 to $33.00 in a research report on Tuesday, May 27th. Barclays increased their price target on shares of Southwest Airlines from $26.00 to $34.00 and gave the company an "equal weight" rating in a research note on Thursday, July 10th. Wall Street Zen cut shares of Southwest Airlines from a "hold" rating to a "sell" rating in a research note on Saturday, July 26th. Deutsche Bank Aktiengesellschaft upgraded shares of Southwest Airlines from a "hold" rating to a "buy" rating and set a $40.00 price target for the company in a research note on Thursday, May 29th. Finally, HSBC cut shares of Southwest Airlines from a "hold" rating to a "reduce" rating in a research note on Thursday, July 24th. Four investment analysts have rated the stock with a Buy rating, nine have assigned a Hold rating and six have assigned a Sell rating to the company's stock. According to data from MarketBeat, the stock presently has an average rating of "Reduce" and a consensus price target of $33.06.

Southwest Airlines Price Performance

Shares of Southwest Airlines stock traded up $0.30 during midday trading on Monday, hitting $31.69. 9,325,475 shares of the company traded hands, compared to its average volume of 6,692,803. The stock has a market cap of $16.65 billion, a price-to-earnings ratio of 48.02, a PEG ratio of 0.81 and a beta of 1.19. The company has a debt-to-equity ratio of 0.51, a quick ratio of 0.49 and a current ratio of 0.56. The firm's fifty day moving average price is $32.94 and its 200-day moving average price is $31.33. Southwest Airlines Co. has a 12 month low of $23.82 and a 12 month high of $37.96.

Southwest Airlines (NYSE:LUV - Get Free Report) last announced its quarterly earnings results on Wednesday, July 23rd. The airline reported $0.43 earnings per share (EPS) for the quarter, missing the consensus estimate of $0.51 by ($0.08). The company had revenue of $7.24 billion for the quarter, compared to the consensus estimate of $7.30 billion. Southwest Airlines had a net margin of 1.43% and a return on equity of 6.27%. The company's revenue for the quarter was down 2.1% compared to the same quarter last year. During the same period last year, the firm posted $0.58 earnings per share. As a group, sell-side analysts forecast that Southwest Airlines Co. will post 1.55 earnings per share for the current year.

Southwest Airlines Dividend Announcement

The company also recently declared a quarterly dividend, which will be paid on Wednesday, September 24th. Stockholders of record on Wednesday, September 3rd will be given a $0.18 dividend. The ex-dividend date is Wednesday, September 3rd. This represents a $0.72 dividend on an annualized basis and a dividend yield of 2.3%. Southwest Airlines's payout ratio is 109.09%.

Southwest Airlines declared that its board has authorized a stock buyback plan on Wednesday, July 23rd that authorizes the company to buyback $2.00 billion in shares. This buyback authorization authorizes the airline to reacquire up to 9.4% of its stock through open market purchases. Stock buyback plans are typically an indication that the company's board believes its shares are undervalued.

Insiders Place Their Bets

In related news, Director Gregg A. Saretsky purchased 3,345 shares of Southwest Airlines stock in a transaction that occurred on Wednesday, August 6th. The stock was bought at an average price of $30.03 per share, for a total transaction of $100,450.35. Following the completion of the transaction, the director owned 23,644 shares in the company, valued at $710,029.32. This represents a 16.48% increase in their ownership of the stock. The acquisition was disclosed in a filing with the SEC, which is accessible through this hyperlink. Also, Director Sarah Feinberg purchased 1,500 shares of Southwest Airlines stock in a transaction that occurred on Tuesday, August 5th. The shares were bought at an average price of $30.01 per share, with a total value of $45,015.00. Following the transaction, the director owned 14,229 shares of the company's stock, valued at $427,012.29. This trade represents a 11.78% increase in their position. The disclosure for this purchase can be found here. Insiders own 0.79% of the company's stock.

Southwest Airlines Profile

Southwest Airlines Co operates as a passenger airline company that provides scheduled air transportation services in the United States and near-international markets. As of December 31, 2023, the company operated a total fleet of 817 Boeing 737 aircraft; and served 121 destinations in 42 states, the District of Columbia, and the Commonwealth of Puerto Rico, as well as ten near-international countries, including Mexico, Jamaica, the Bahamas, Aruba, the Dominican Republic, Costa Rica, Belize, Cuba, the Cayman Islands, and Turks and Caicos.