Southwest Airlines Co. (NYSE:LUV) Receives Consensus Recommendation of "Reduce" from Analysts

Key Points

• Analysts have given Southwest Airlines Co. a consensus rating of "Reduce", with 6 sell ratings, 9 hold ratings, and 4 buy ratings, while the average 1-year price target is $33.06.
• Southwest Airlines reported $0.43 earnings per share, missing the consensus estimate of $0.51, with revenue of $7.24 billion, down 2.1% year-over-year.
• The company has authorized a $2 billion share repurchase program, suggesting management believes the stock is undervalued.

Shares of Southwest Airlines Co. (NYSE:LUV - Get Free Report) have been assigned a consensus rating of "Reduce" from the nineteen analysts that are presently covering the stock, Marketbeat reports. Six investment analysts have rated the stock with a sell rating, nine have issued a hold rating and four have assigned a buy rating to the company. The average 1-year price target among brokerages that have covered the stock in the last year is $33.0625.

Several research firms have recently commented on LUV. UBS Group raised their price objective on shares of Southwest Airlines from $27.00 to $34.00 and gave the company a "neutral" rating in a research note on Monday, July 7th. Jefferies Financial Group raised shares of Southwest Airlines from an "underperform" rating to a "hold" rating and raised their price objective for the company from $24.00 to $33.00 in a research note on Tuesday, May 27th. Wall Street Zen lowered shares of Southwest Airlines from a "hold" rating to a "sell" rating in a research note on Saturday, July 26th. Raymond James Financial reissued an "outperform" rating and issued a $40.00 price objective (down previously from $42.00) on shares of Southwest Airlines in a research note on Tuesday, April 29th. Finally, Susquehanna raised their price objective on shares of Southwest Airlines from $25.00 to $30.00 and gave the company a "neutral" rating in a research note on Tuesday, August 5th.

Southwest Airlines Trading Up 0.8%

Shares of LUV stock opened at $30.97 on Thursday. 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 firm has a market cap of $16.27 billion, a PE ratio of 46.92, a price-to-earnings-growth ratio of 0.80 and a beta of 1.26. The company has a 50-day moving average of $33.00 and a two-hundred day moving average of $31.15. 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). Southwest Airlines had a return on equity of 6.27% and a net margin of 1.43%. The company had revenue of $7.24 billion for the quarter, compared to analysts' expectations of $7.30 billion. During the same period last year, the business earned $0.58 EPS. The company's quarterly revenue was down 2.1% compared to the same quarter last year. On average, analysts predict that Southwest Airlines will post 1.55 EPS for the current year.

Southwest Airlines announced that its board has authorized a share 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 buy up to 9.4% of its shares through open market purchases. Shares buyback programs are typically an indication that the company's management believes its shares are undervalued.

Southwest Airlines Dividend Announcement

The business also recently disclosed a quarterly dividend, which will be paid on Wednesday, September 24th. Shareholders of record on Wednesday, September 3rd will be issued a dividend of $0.18 per share. The ex-dividend date of this dividend is Wednesday, September 3rd. This represents a $0.72 dividend on an annualized basis and a yield of 2.3%. Southwest Airlines's dividend payout ratio (DPR) is presently 109.09%.

Insider Buying and Selling

In other Southwest Airlines news, Director Gregg A. Saretsky bought 3,345 shares of the business's stock in a transaction dated Wednesday, August 6th. The shares were acquired at an average cost of $30.03 per share, with a total value 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 position. The purchase was disclosed in a legal filing with the SEC, which is accessible through this link. Also, Director Sarah Feinberg bought 1,500 shares of the business's stock in a transaction dated Tuesday, August 5th. The stock was acquired at an average cost of $30.01 per share, for a total transaction of $45,015.00. Following the completion of the acquisition, the director directly owned 14,229 shares in the company, valued at approximately $427,012.29. This trade represents a 11.78% increase in their ownership of the stock. The disclosure for this purchase can be found here. 0.79% of the stock is currently owned by company insiders.

Hedge Funds Weigh In On Southwest Airlines

A number of institutional investors have recently modified their holdings of the business. Ameriflex Group Inc. increased its holdings in shares of Southwest Airlines by 7.1% in the 2nd quarter. Ameriflex Group Inc. now owns 4,690 shares of the airline's stock valued at $148,000 after acquiring an additional 310 shares during the period. CWC Advisors LLC. increased its holdings in shares of Southwest Airlines by 2.4% in the 4th quarter. CWC Advisors LLC. now owns 13,310 shares of the airline's stock valued at $447,000 after acquiring an additional 311 shares during the period. Copperwynd Financial LLC increased its holdings in shares of Southwest Airlines by 2.1% in the 1st quarter. Copperwynd Financial LLC now owns 16,301 shares of the airline's stock valued at $547,000 after acquiring an additional 337 shares during the period. PNC Financial Services Group Inc. increased its holdings in shares of Southwest Airlines by 0.5% in the 1st quarter. PNC Financial Services Group Inc. now owns 76,719 shares of the airline's stock valued at $2,576,000 after acquiring an additional 345 shares during the period. Finally, Horizon Investments LLC increased its holdings in shares of Southwest Airlines by 4.5% in the 1st quarter. Horizon Investments LLC now owns 8,590 shares of the airline's stock valued at $288,000 after acquiring an additional 369 shares during the period. 80.82% of the stock is owned by institutional investors and hedge funds.

Southwest Airlines Company 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.

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