Southwest Airlines (NYSE:LUV) Releases Quarterly Earnings Results, Beats Expectations By $0.43 EPS

Key Points

• Southwest Airlines beat quarterly expectations, reporting EPS of $0.94 versus analysts’ estimate of $0.51, and revenue of $8.72 billion, slightly above the $8.58 billion consensus.
• The stock fell 2.2% on the day despite the earnings beat, trading at $47.61 amid lighter-than-average volume.
• Management continued returning cash to shareholders with a quarterly dividend of $0.18 per share, equal to a $0.72 annualized payout and a 1.5% yield.

Southwest Airlines (NYSE:LUV - Get Free Report) announced its earnings results on Wednesday. The airline reported $0.94 earnings per share for the quarter, topping analysts' consensus estimates of $0.51 by $0.43, FiscalAI reports. The business had revenue of $8.72 billion during the quarter, compared to the consensus estimate of $8.58 billion. Southwest Airlines had a net margin of 2.83% and a return on equity of 10.66%.

Southwest Airlines Stock Down 2.2%

NYSE:LUV traded down $1.08 on Wednesday, hitting $47.61. The stock had a trading volume of 5,983,755 shares, compared to its average volume of 8,237,609. The company has a quick ratio of 0.41, a current ratio of 0.48 and a debt-to-equity ratio of 0.66. Southwest Airlines has a 52 week low of $28.98 and a 52 week high of $55.11. The business's fifty day moving average is $45.61 and its 200 day moving average is $44.22. The company has a market cap of $23.27 billion, a PE ratio of 30.71, a P/E/G ratio of 0.46 and a beta of 1.12.

Southwest Airlines Dividend Announcement

The company also recently declared a quarterly dividend, which was paid on Thursday, July 2nd. Shareholders of record on Thursday, June 11th were issued a $0.18 dividend. The ex-dividend date was Thursday, June 11th. This represents a $0.72 annualized dividend and a yield of 1.5%. Southwest Airlines's dividend payout ratio is presently 46.45%.

Hedge Funds Weigh In On Southwest Airlines

A number of institutional investors have recently modified their holdings of LUV. Nearwater Capital Markets Ltd increased its stake in Southwest Airlines by 75.0% during the 4th quarter. Nearwater Capital Markets Ltd now owns 2,800,000 shares of the airline's stock valued at $115,724,000 after purchasing an additional 1,200,000 shares in the last quarter. Canada Pension Plan Investment Board lifted its stake in shares of Southwest Airlines by 315.3% in the second quarter. Canada Pension Plan Investment Board now owns 1,247,837 shares of the airline's stock valued at $40,480,000 after buying an additional 947,346 shares in the last quarter. Federated Hermes Inc. lifted its stake in shares of Southwest Airlines by 263.2% in the fourth quarter. Federated Hermes Inc. now owns 1,023,730 shares of the airline's stock valued at $42,311,000 after buying an additional 741,839 shares in the last quarter. Amundi lifted its stake in shares of Southwest Airlines by 116.4% in the third quarter. Amundi now owns 1,182,916 shares of the airline's stock valued at $38,539,000 after buying an additional 636,261 shares in the last quarter. Finally, Invesco Ltd. grew its holdings in shares of Southwest Airlines by 9.2% during the third quarter. Invesco Ltd. now owns 6,837,197 shares of the airline's stock valued at $218,175,000 after buying an additional 577,326 shares during the last quarter. 80.82% of the stock is owned by institutional investors and hedge funds.

Wall Street Analyst Weigh In

Several equities research analysts recently commented on the company. The Goldman Sachs Group upped their target price on Southwest Airlines from $30.00 to $35.00 and gave the company a "sell" rating in a research report on Thursday, July 2nd. UBS Group boosted their price target on Southwest Airlines from $53.00 to $61.00 and gave the company a "buy" rating in a research note on Tuesday, June 23rd. BMO Capital Markets increased their price target on Southwest Airlines from $45.00 to $58.50 and gave the stock an "outperform" rating in a report on Thursday, July 2nd. Citigroup raised their price objective on shares of Southwest Airlines from $44.00 to $55.00 and gave the stock a "neutral" rating in a research report on Friday, June 26th. Finally, Morgan Stanley lifted their price objective on shares of Southwest Airlines from $60.00 to $65.00 and gave the company an "overweight" rating in a research note on Monday, July 6th. Nine analysts have rated the stock with a Buy rating, nine have issued a Hold rating and four have assigned a Sell rating to the company. According to data from MarketBeat.com, the company has a consensus rating of "Hold" and a consensus target price of $49.58.

Southwest Airlines Company Profile

Southwest Airlines Co is a U.S.-based low-cost carrier that operates a point-to-point domestic and near-international airline network. Headquartered in Dallas, Texas, the company primarily flies Boeing 737 aircraft and offers no-frills, single-class service designed to keep fares competitive. Southwest's operating model emphasizes high aircraft utilization, quick turnaround times and an open seating policy, allowing customers to board and select seats on a first-come, first-served basis.

Founded in 1967 by Herb Kelleher and Rollin King as Air Southwest Company, Southwest began commercial service in 1971, initially connecting Dallas, Houston and San Antonio.

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