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Southwest Airlines (NYSE:LUV) Stock Price Down 11.3% on Disappointing Earnings

Southwest Airlines logo with Transportation background

Southwest Airlines Co. (NYSE:LUV - Get Free Report) shares dropped 11.3% on Thursday following a dissappointing earnings announcement. The stock traded as low as $33.06 and last traded at $33.20. Approximately 17,366,949 shares were traded during mid-day trading, an increase of 47% from the average daily volume of 11,819,476 shares. The stock had previously closed at $37.44.

The airline reported $0.43 EPS for the quarter, missing the consensus estimate of $0.51 by ($0.08). The firm had revenue of $7.24 billion during the quarter, compared to the consensus estimate of $7.30 billion. Southwest Airlines had a return on equity of 7.27% and a net margin of 1.98%. The business's revenue was down 2.1% compared to the same quarter last year. During the same quarter last year, the business earned $0.58 EPS.

Southwest Airlines Dividend Announcement

The firm also recently announced a quarterly dividend, which was paid on Wednesday, July 9th. Investors of record on Wednesday, June 18th were paid a $0.18 dividend. The ex-dividend date was Wednesday, June 18th. This represents a $0.72 dividend on an annualized basis and a yield of 2.18%. Southwest Airlines's payout ratio is currently 84.71%.

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

Wall Street Analyst Weigh In

Several equities analysts recently weighed in on the stock. Jefferies Financial Group upgraded shares of Southwest Airlines from an "underperform" rating to a "hold" rating and increased their price objective for the company from $24.00 to $33.00 in a report on Tuesday, May 27th. UBS Group increased their target price on shares of Southwest Airlines from $27.00 to $34.00 and gave the stock a "neutral" rating in a report on Monday, July 7th. Susquehanna cut their price target on shares of Southwest Airlines from $34.00 to $25.00 and set a "neutral" rating for the company in a research note on Monday, April 7th. Citigroup decreased their price target on shares of Southwest Airlines from $30.00 to $23.00 and set a "sell" rating on the stock in a report on Monday, April 14th. Finally, Raymond James Financial reiterated an "outperform" rating and set a $40.00 target price (down previously from $42.00) on shares of Southwest Airlines in a research report on Tuesday, April 29th. Five equities research analysts have rated the stock with a sell rating, ten have given a hold rating and four have given a buy rating to the company. According to data from MarketBeat.com, the company has a consensus rating of "Hold" and an average target price of $33.13.

Check Out Our Latest Stock Analysis on Southwest Airlines

Insider Buying and Selling at Southwest Airlines

In related news, Director David P. Hess acquired 7,500 shares of the company's stock in a transaction that occurred on Monday, April 28th. The shares were bought at an average price of $26.52 per share, with a total value of $198,900.00. Following the completion of the transaction, the director directly owned 23,156 shares in the company, valued at $614,097.12. This trade represents a 47.90% increase in their ownership of the stock. The acquisition was disclosed in a document filed with the Securities & Exchange Commission, which can be accessed through this link. Also, Director Gregg A. Saretsky acquired 3,670 shares of the company's stock in a transaction that occurred on Wednesday, April 30th. The shares were bought at an average cost of $27.29 per share, for a total transaction of $100,154.30. Following the transaction, the director owned 14,881 shares of the company's stock, valued at $406,102.49. This represents a 32.74% increase in their ownership of the stock. The disclosure for this purchase can be found here. Corporate insiders own 0.79% of the company's stock.

Institutional Investors Weigh In On Southwest Airlines

Hedge funds and other institutional investors have recently added to or reduced their stakes in the business. Sanctuary Wealth Management L.L.C. raised its stake in shares of Southwest Airlines by 196.3% in the fourth quarter. Sanctuary Wealth Management L.L.C. now owns 889 shares of the airline's stock worth $30,000 after purchasing an additional 589 shares during the last quarter. Pandora Wealth Inc. acquired a new stake in Southwest Airlines in the first quarter valued at approximately $34,000. Cheviot Value Management LLC acquired a new stake in Southwest Airlines in the first quarter valued at approximately $42,000. Armstrong Advisory Group Inc. acquired a new stake in shares of Southwest Airlines in the second quarter worth approximately $42,000. Finally, TD Private Client Wealth LLC boosted its stake in Southwest Airlines by 67.8% during the second quarter. TD Private Client Wealth LLC now owns 1,448 shares of the airline's stock worth $47,000 after buying an additional 585 shares during the last quarter. 80.82% of the stock is currently owned by hedge funds and other institutional investors.

Southwest Airlines Price Performance

The stock has a 50 day simple moving average of $33.48 and a two-hundred day simple moving average of $31.34. The company has a market cap of $18.85 billion, a price-to-earnings ratio of 38.91, a price-to-earnings-growth ratio of 5.64 and a beta of 1.21. The company has a debt-to-equity ratio of 0.44, a current ratio of 0.77 and a quick ratio of 0.72.

About Southwest Airlines

(Get Free Report)

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.

Further Reading

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest and most accurate reporting. This story was reviewed by MarketBeat's editorial team prior to publication. Please send any questions or comments about this story to contact@marketbeat.com.

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