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Southwest Airlines (LUV) Gains But Lags Market: What You Should Know

·3 min read
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Southwest Airlines (LUV) closed at $41.50 in the latest trading session, marking a +0.02% move from the prior day. This change lagged the S&P 500's 0.59% gain on the day. Meanwhile, the Dow gained 0.15%, and the Nasdaq, a tech-heavy index, lost 0.02%.

Heading into today, shares of the airline had gained 17.47% over the past month, outpacing the Transportation sector's gain of 5.55% and the S&P 500's gain of 7.25% in that time.

Wall Street will be looking for positivity from Southwest Airlines as it approaches its next earnings report date. This is expected to be July 28, 2022. On that day, Southwest Airlines is projected to report earnings of $1.15 per share, which would represent year-over-year growth of 428.57%. Meanwhile, our latest consensus estimate is calling for revenue of $6.72 billion, up 67.56% from the prior-year quarter.

LUV's full-year Zacks Consensus Estimates are calling for earnings of $2.71 per share and revenue of $24.51 billion. These results would represent year-over-year changes of +226.05% and +55.22%, respectively.

Any recent changes to analyst estimates for Southwest Airlines should also be noted by investors. These revisions help to show the ever-changing nature of near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 2.47% higher. Southwest Airlines currently has a Zacks Rank of #3 (Hold).

In terms of valuation, Southwest Airlines is currently trading at a Forward P/E ratio of 15.31. This valuation marks a discount compared to its industry's average Forward P/E of 24.5.

Also, we should mention that LUV has a PEG ratio of 2.55. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. LUV's industry had an average PEG ratio of 1.58 as of yesterday's close.

The Transportation - Airline industry is part of the Transportation sector. This group has a Zacks Industry Rank of 205, putting it in the bottom 19% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.

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Southwest Airlines Co. (LUV) : Free Stock Analysis Report

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