Southwest Airlines (NYSE:LUV) Shares Gap Up - Should You Buy?

Key Points

• Shares gapped up premarket — LUV opened at $42.68 versus the prior close of $37.87 (last trade ~$41.47), rising about 7.2% on heavy volume after news including a Barclays upgrade to Overweight with a $56 price target.
• The analyst landscape is mixed: MarketBeat shows a consensus rating of "Hold" with a $43.72 consensus price target and a split of 8 Buys, 8 Holds and 4 Sells.
• Recent results showed a slight EPS beat ($0.58 vs. $0.56) but revenue missed modestly; the company has a market cap of ~$19.9B, a P/E of ~48, and pays a $0.18 quarterly dividend (1.8% yield) with an ~85.7% payout ratio.

Southwest Airlines Co. (NYSE:LUV - Get Free Report)'s share price gapped up prior to trading on Wednesday . The stock had previously closed at $37.87, but opened at $42.68. Southwest Airlines shares last traded at $41.4670, with a volume of 3,928,085 shares traded.

Analysts Set New Price Targets

Several research firms have recently issued reports on LUV. Barclays raised shares of Southwest Airlines from an "equal weight" rating to an "overweight" rating and increased their price objective for the stock from $34.00 to $56.00 in a research report on Tuesday, December 16th. Jefferies Financial Group upped their target price on shares of Southwest Airlines from $41.00 to $42.00 and gave the company a "hold" rating in a research note on Tuesday, March 31st. Evercore upped their target price on shares of Southwest Airlines from $40.00 to $45.00 and gave the company an "in-line" rating in a research note on Thursday, January 29th. Zacks Research downgraded shares of Southwest Airlines from a "strong-buy" rating to a "hold" rating in a research note on Wednesday, March 11th. Finally, Rothschild & Co Redburn upped their target price on shares of Southwest Airlines from $27.00 to $35.00 and gave the company a "sell" rating in a research note on Thursday, March 5th. Eight research analysts have rated the stock with a Buy rating, eight have assigned a Hold rating and four have given a Sell rating to the stock. Based on data from MarketBeat.com, the stock currently has a consensus rating of "Hold" and a consensus price target of $43.72.

Southwest Airlines Stock Up 7.2%

The firm has a market capitalization of $19.93 billion, a PE ratio of 48.32, a P/E/G ratio of 0.30 and a beta of 1.19. The firm's 50 day moving average price is $45.37 and its two-hundred day moving average price is $39.57. The company has a quick ratio of 0.45, a current ratio of 0.52 and a debt-to-equity ratio of 0.57.

Southwest Airlines (NYSE:LUV - Get Free Report) last announced its earnings results on Wednesday, January 28th. The airline reported $0.58 earnings per share for the quarter, beating the consensus estimate of $0.56 by $0.02. The business had revenue of $7.44 billion during the quarter, compared to the consensus estimate of $7.51 billion. Southwest Airlines had a net margin of 1.57% and a return on equity of 6.18%. The business's quarterly revenue was up 7.4% compared to the same quarter last year. During the same period in the prior year, the firm earned $0.56 earnings per share. Southwest Airlines has set its FY 2026 guidance at 4.000- EPS and its Q1 2026 guidance at 0.450- EPS. As a group, research analysts forecast that Southwest Airlines Co. will post 1.55 EPS for the current fiscal year.

Southwest Airlines Dividend Announcement

The business also recently disclosed a quarterly dividend, which was paid on Thursday, April 2nd. Shareholders of record on Thursday, March 12th were paid a dividend of $0.18 per share. This represents a $0.72 dividend on an annualized basis and a yield of 1.8%. The ex-dividend date was Thursday, March 12th. Southwest Airlines's dividend payout ratio is 85.71%.

Institutional Inflows and Outflows

Large investors have recently added to or reduced their stakes in the stock. SHP Wealth Management bought a new position in Southwest Airlines during the 4th quarter valued at $25,000. GHP Investment Advisors Inc. bought a new position in Southwest Airlines during the 4th quarter valued at $26,000. Entrust Financial LLC bought a new position in Southwest Airlines during the 4th quarter valued at $26,000. Los Angeles Capital Management LLC bought a new position in Southwest Airlines during the 4th quarter valued at $26,000. Finally, Corsicana & Co. bought a new position in Southwest Airlines during the 3rd quarter valued at $27,000. 80.82% of the stock is currently owned by institutional investors.

About Southwest Airlines

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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