Southwest Airlines (LUV) Stock Drops Despite Market Gains: Important Facts to Note
In the latest trading session, Southwest Airlines (LUV) closed at $33.96, marking a -0.9% move from the previous day. This change lagged the S&P 500's daily gain of 0.8%. At the same time, the Dow added 0.23%, and the tech-heavy Nasdaq gained 1.14%.
Shares of the airline witnessed a gain of 13.55% over the previous month, beating the performance of the Transportation sector with its gain of 5.14% and the S&P 500's gain of 5.2%.
The upcoming earnings release of Southwest Airlines will be of great interest to investors. The company is forecasted to report an EPS of -$0.05, showcasing an 81.48% upward movement from the corresponding quarter of the prior year. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $6.46 billion, up 13.15% from the year-ago period.
In terms of the entire fiscal year, the Zacks Consensus Estimates predict earnings of $1.84 per share and a revenue of $28.59 billion, indicating changes of +17.2% and +9.59%, respectively, from the former year.
Investors should also pay attention to any latest changes in analyst estimates for Southwest Airlines. Recent revisions tend to reflect the latest near-term business trends. Hence, positive alterations in estimates signify analyst optimism regarding the company's business and profitability.
Our research suggests that these changes in estimates have a direct relationship with upcoming stock price performance. 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, running from #1 (Strong Buy) to #5 (Strong Sell), holds an admirable track record of superior performance, independently audited, with #1 stocks contributing an average annual return of +25% since 1988. The Zacks Consensus EPS estimate has moved 5.62% higher within the past month. Southwest Airlines is currently a Zacks Rank #3 (Hold).
Looking at valuation, Southwest Airlines is presently trading at a Forward P/E ratio of 18.59. For comparison, its industry has an average Forward P/E of 8.52, which means Southwest Airlines is trading at a premium to the group.
It's also important to note that LUV currently trades at a PEG ratio of 1.08. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. The Transportation - Airline industry currently had an average PEG ratio of 0.55 as of yesterday's close.
The Transportation - Airline industry is part of the Transportation sector. With its current Zacks Industry Rank of 37, this industry ranks in the top 15% of all industries, numbering over 250.
The Zacks Industry Rank is ordered from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.
Don't forget to use Zacks.com to keep track of all these stock-moving metrics, and others, in the upcoming trading sessions.
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Southwest Airlines Co. (LUV) : Free Stock Analysis Report
