Southwest Airlines Target of Unusually Large Options Trading (NYSE:LUV)

Key Points

• Southwest Airlines experienced a significant surge in options trading, with investors purchasing 47,042 call options, representing a 114% increase from the usual volume.
• Directors Sarah Feinberg and Gregg A. Saretsky increased their stock holdings in Southwest Airlines by 11.78% and 16.48% respectively, indicating insider confidence in the company’s prospects.
• Several analysts adjusted their price targets for Southwest Airlines shares, with revisions ranging from $21.00 to $35.00, reflecting a mixed outlook with a consensus rating of "Hold."

Southwest Airlines Co. (NYSE:LUV - Get Free Report) was the target of unusually large options trading activity on Thursday. Investors purchased 47,042 call options on the company. This is an increase of approximately 114% compared to the typical daily volume of 21,963 call options.

Insiders Place Their Bets

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

Institutional Inflows and Outflows

Several hedge funds and other institutional investors have recently bought and sold shares of LUV. Ameriflex Group Inc. raised its stake in Southwest Airlines by 7.1% during the second quarter. Ameriflex Group Inc. now owns 4,690 shares of the airline's stock worth $148,000 after acquiring an additional 310 shares in the last quarter. Benjamin Edwards Inc. lifted its holdings in shares of Southwest Airlines by 1.4% during the 2nd quarter. Benjamin Edwards Inc. now owns 24,857 shares of the airline's stock valued at $806,000 after purchasing an additional 333 shares in the last quarter. Copperwynd Financial LLC lifted its stake in 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 in the last quarter. GAMMA Investing LLC lifted its stake in Southwest Airlines by 2.4% in the 3rd quarter. GAMMA Investing LLC now owns 14,285 shares of the airline's stock valued at $456,000 after acquiring an additional 341 shares in the last quarter. Finally, PNC Financial Services Group Inc. increased its position in shares of Southwest Airlines by 0.5% during the 1st quarter. PNC Financial Services Group Inc. now owns 76,719 shares of the airline's stock worth $2,576,000 after purchasing an additional 345 shares during the last quarter. 80.82% of the stock is owned by institutional investors.

Analysts Set New Price Targets

Several analysts have recently issued reports on the stock. TD Cowen upped their target price on shares of Southwest Airlines from $21.00 to $24.00 and gave the company a "hold" rating in a research report on Friday, October 3rd. Wall Street Zen lowered shares of Southwest Airlines from a "hold" rating to a "sell" rating in a research note on Saturday, July 26th. Susquehanna raised their target price on shares of Southwest Airlines from $30.00 to $35.00 and gave the stock a "neutral" rating in a report on Friday, October 3rd. Hsbc Global Res upgraded shares of Southwest Airlines to a "moderate sell" rating in a research report on Thursday, July 24th. Finally, Evercore ISI raised their price target on shares of Southwest Airlines from $34.00 to $35.00 and gave the stock an "in-line" rating in a research note on Monday, September 29th. Five analysts have rated the stock with a Buy rating, ten have issued a Hold rating and four have assigned a Sell rating to the company. Based on data from MarketBeat.com, the stock presently has an average rating of "Hold" and a consensus price target of $33.38.

Southwest Airlines Trading Down 1.6%

Shares of LUV traded down $0.53 during mid-day trading on Thursday, hitting $31.92. The company had a trading volume of 4,514,330 shares, compared to its average volume of 11,157,814. The business's 50-day simple moving average is $31.70 and its 200-day simple moving average is $31.50. The company has a quick ratio of 0.49, a current ratio of 0.56 and a debt-to-equity ratio of 0.51. Southwest Airlines has a 1-year low of $23.82 and a 1-year high of $37.96. The stock has a market cap of $16.76 billion, a PE ratio of 48.55, a P/E/G ratio of 0.85 and a beta of 1.21.

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

Southwest Airlines announced that its Board of Directors has initiated a share repurchase program on Wednesday, July 23rd that authorizes the company to buyback $2.00 billion in shares. This buyback authorization authorizes the airline to reacquire up to 9.4% of its shares through open market purchases. Shares buyback programs are typically a sign that the company's leadership believes its shares are undervalued.

Southwest Airlines Dividend Announcement

The business also recently announced a quarterly dividend, which was paid on Wednesday, September 24th. Shareholders of record on Wednesday, September 3rd were given a dividend of $0.18 per share. The ex-dividend date of this dividend was 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 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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