Southwest Airlines (NYSE:LUV) Shares Gap Down After Earnings Miss

Southwest Airlines Co. (NYSE:LUV) gapped down before the market opened on Thursday after the company announced weaker than expected quarterly earnings. The stock had previously closed at $29.30, but opened at $26.88. Southwest Airlines shares last traded at $26.82, with a volume of 11,313,675 shares changing hands.

The airline reported ($0.36) earnings per share for the quarter, missing the consensus estimate of ($0.34) by ($0.02). The company had revenue of $6.33 billion during the quarter, compared to the consensus estimate of $6.42 billion. Southwest Airlines had a return on equity of 9.40% and a net margin of 1.91%. Southwest Airlines’s revenue for the quarter was up 11.0% on a year-over-year basis. During the same period in the previous year, the firm posted ($0.27) EPS.

Southwest Airlines Announces Dividend

The business also recently announced a quarterly dividend, which was paid on Wednesday, March 27th. Stockholders of record on Wednesday, March 6th were given a $0.18 dividend. This represents a $0.72 annualized dividend and a dividend yield of 2.66%. The ex-dividend date of this dividend was Tuesday, March 5th. Southwest Airlines’s payout ratio is currently 96.00%.

Analyst Upgrades and Downgrades

Several research analysts have recently commented on LUV shares. Evercore ISI reaffirmed an “inline” rating and issued a $35.00 price target on shares of Southwest Airlines in a report on Tuesday, January 2nd. Barclays decreased their price target on shares of Southwest Airlines from $30.00 to $26.00 and set an “equal weight” rating for the company in a report on Friday. Argus raised shares of Southwest Airlines from a “hold” rating to a “buy” rating and set a $40.00 price target for the company in a report on Tuesday, March 12th. UBS Group started coverage on shares of Southwest Airlines in a research note on Wednesday, March 20th. They set a “buy” rating and a $36.00 target price for the company. Finally, Deutsche Bank Aktiengesellschaft raised shares of Southwest Airlines from a “hold” rating to a “buy” rating and boosted their target price for the company from $28.00 to $42.00 in a research note on Tuesday, February 20th. Four investment analysts have rated the stock with a sell rating, nine have assigned a hold rating and five have issued a buy rating to the company. According to data from MarketBeat, the company presently has a consensus rating of “Hold” and an average target price of $31.18.

Institutional Inflows and Outflows

Several large investors have recently added to or reduced their stakes in the stock. Arizona State Retirement System increased its stake in Southwest Airlines by 0.8% in the 4th quarter. Arizona State Retirement System now owns 40,926 shares of the airline’s stock valued at $1,182,000 after buying an additional 339 shares during the period. TRUE Private Wealth Advisors grew its position in Southwest Airlines by 2.2% in the fourth quarter. TRUE Private Wealth Advisors now owns 17,383 shares of the airline’s stock worth $502,000 after acquiring an additional 369 shares in the last quarter. State of Alaska Department of Revenue grew its position in Southwest Airlines by 0.6% in the first quarter. State of Alaska Department of Revenue now owns 64,743 shares of the airline’s stock worth $1,889,000 after acquiring an additional 370 shares in the last quarter. Brookstone Capital Management grew its position in Southwest Airlines by 5.0% in the first quarter. Brookstone Capital Management now owns 8,055 shares of the airline’s stock worth $235,000 after acquiring an additional 382 shares in the last quarter. Finally, Capital Advisors Ltd. LLC grew its position in Southwest Airlines by 82.8% in the fourth quarter. Capital Advisors Ltd. LLC now owns 914 shares of the airline’s stock worth $26,000 after acquiring an additional 414 shares in the last quarter. Institutional investors and hedge funds own 80.82% of the company’s stock.

Southwest Airlines Price Performance

The company has a quick ratio of 1.07, a current ratio of 1.14 and a debt-to-equity ratio of 0.76. The company has a market capitalization of $16.17 billion, a P/E ratio of 36.05, a P/E/G ratio of 1.04 and a beta of 1.15. The company’s 50-day simple moving average is $30.34 and its 200 day simple moving average is $28.53.

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.