Southwest Airlines Co. (NYSE:LUV) Given Average Recommendation of "Reduce" by Analysts

Key Points

• Southwest Airlines has received an average recommendation of "Reduce" from analysts, with six sell ratings, nine hold ratings, and four buy ratings.
• The company reported $0.43 earnings per share for the last quarter, missing expectations of $0.51, and experienced a 2.1% year-over-year revenue decline.
• Southwest Airlines' Board approved a $2.00 billion stock repurchase program, indicating that the company believes its stock is undervalued.

Shares of Southwest Airlines Co. (NYSE:LUV - Get Free Report) have earned a consensus rating of "Reduce" from the nineteen brokerages that are covering the company, MarketBeat reports. Six analysts have rated the stock with a sell rating, nine have assigned a hold rating and four have assigned a buy rating to the company. The average 12 month target price among brokers that have updated their coverage on the stock in the last year is $33.0625.

Several brokerages have recently weighed in on LUV. Hsbc Global Res upgraded Southwest Airlines to a "moderate sell" rating in a research note on Thursday, July 24th. Susquehanna increased their price target on shares of Southwest Airlines from $25.00 to $30.00 and gave the stock a "neutral" rating in a research report on Tuesday, August 5th. Barclays increased their price target on shares of Southwest Airlines from $26.00 to $34.00 and gave the stock an "equal weight" rating in a research report on Thursday, July 10th. Jefferies Financial Group raised shares of Southwest Airlines from an "underperform" rating to a "hold" rating and increased their price target for the stock from $24.00 to $33.00 in a research report on Tuesday, May 27th. Finally, Deutsche Bank Aktiengesellschaft raised shares of Southwest Airlines from a "hold" rating to a "buy" rating and set a $40.00 price target on the stock in a research report on Thursday, May 29th.

Insider Activity

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

Hedge Funds Weigh In On Southwest Airlines

A number of large investors have recently bought and sold shares of the business. Primecap Management Co. CA lifted its holdings 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 worth $1,668,533,000 after acquiring an additional 788,255 shares during the last quarter. Artisan Partners Limited Partnership lifted its holdings in Southwest Airlines by 0.9% in the second quarter. Artisan Partners Limited Partnership now owns 10,763,935 shares of the airline's stock worth $349,182,000 after acquiring an additional 98,290 shares during the last quarter. Arrowstreet Capital Limited Partnership lifted its holdings in Southwest Airlines by 2,403.8% in the second quarter. Arrowstreet Capital Limited Partnership now owns 10,120,368 shares of the airline's stock worth $328,305,000 after acquiring an additional 9,716,160 shares during the last quarter. Jacobs Levy Equity Management Inc. lifted its holdings 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 worth $202,219,000 after acquiring an additional 2,391,495 shares during the last quarter. Finally, Charles Schwab Investment Management Inc. lifted its holdings 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 worth $120,987,000 after acquiring an additional 136,410 shares during the last quarter. Institutional investors own 80.82% of the company's stock.

Southwest Airlines Stock Up 0.8%

Shares of Southwest Airlines stock opened at $31.36 on Monday. The business has a 50-day moving average of $32.96 and a 200-day moving average of $31.32. The company has a debt-to-equity ratio of 0.51, a current ratio of 0.56 and a quick ratio of 0.49. The company has a market capitalization of $16.47 billion, a PE ratio of 47.52, a P/E/G ratio of 0.81 and a beta of 1.19. Southwest Airlines has a 1-year low of $23.82 and a 1-year high of $37.96.

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

Southwest Airlines declared that its Board of Directors has approved a stock repurchase program on Wednesday, July 23rd that authorizes the company to buyback $2.00 billion in outstanding shares. This buyback authorization authorizes the airline to reacquire up to 9.4% of its shares through open market purchases. Shares buyback programs are usually a sign that the company's board believes its stock is undervalued.

Southwest Airlines Dividend Announcement

The business 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 dividend of $0.18 per share. The ex-dividend date of this dividend is Wednesday, September 3rd. This represents a $0.72 annualized dividend and a dividend yield of 2.3%. Southwest Airlines's dividend payout ratio (DPR) is presently 109.09%.

About Southwest Airlines

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.

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