Southwest Airlines (NYSE:LUV) Shares Gap Down on Disappointing Earnings

Southwest Airlines Co. (NYSE:LUV)’s share price 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) EPS 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 analysts’ expectations of $6.42 billion. Southwest Airlines had a return on equity of 9.40% and a net margin of 1.91%. The firm’s quarterly revenue was up 11.0% on a year-over-year basis. During the same quarter in the prior year, the firm posted ($0.27) EPS.

Southwest Airlines Dividend Announcement

The company also recently disclosed a quarterly dividend, which was paid on Wednesday, March 27th. Shareholders of record on Wednesday, March 6th were given a dividend of $0.18 per share. The ex-dividend date of this dividend was Tuesday, March 5th. This represents a $0.72 annualized dividend and a yield of 2.70%. Southwest Airlines’s payout ratio is 96.00%.

Analyst Ratings Changes

Several equities analysts have recently issued reports on the stock. Barclays lowered their target price on shares of Southwest Airlines from $32.00 to $30.00 and set an “equal weight” rating for the company in a report on Friday, April 5th. JPMorgan Chase & Co. boosted their price objective on shares of Southwest Airlines from $24.00 to $29.00 and gave the stock a “neutral” rating in a report on Friday, January 26th. Sanford C. Bernstein upgraded shares of Southwest Airlines from an “underperform” rating to a “market perform” rating and boosted their price objective for the stock from $26.00 to $32.00 in a report on Tuesday, February 20th. StockNews.com lowered shares of Southwest Airlines from a “hold” rating to a “sell” rating in a research note on Friday, April 12th. Finally, Argus upgraded shares of Southwest Airlines from a “hold” rating to a “buy” rating and set a $40.00 target price for the company in a research note on Tuesday, March 12th. Four analysts have rated the stock with a sell rating, nine have issued a hold rating and five have given a buy rating to the stock. According to MarketBeat, Southwest Airlines has an average rating of “Hold” and an average price target of $31.82.

Institutional Trading of Southwest Airlines

Several hedge funds have recently made changes to their positions in the business. Capital World Investors raised its position in Southwest Airlines by 21.4% in the 4th quarter. Capital World Investors now owns 53,475,988 shares of the airline’s stock worth $1,544,387,000 after purchasing an additional 9,444,279 shares during the period. Artisan Partners Limited Partnership raised its position in Southwest Airlines by 0.4% in the 4th quarter. Artisan Partners Limited Partnership now owns 10,790,654 shares of the airline’s stock worth $311,634,000 after purchasing an additional 47,119 shares during the period. Provident Trust Co. raised its position in Southwest Airlines by 6.5% in the 4th quarter. Provident Trust Co. now owns 7,599,210 shares of the airline’s stock worth $219,465,000 after purchasing an additional 460,480 shares during the period. U S Global Investors Inc. raised its position in Southwest Airlines by 24.9% in the 4th quarter. U S Global Investors Inc. now owns 6,210,347 shares of the airline’s stock worth $179,355,000 after purchasing an additional 1,238,468 shares during the period. Finally, Northern Trust Corp raised its position in Southwest Airlines by 0.7% in the 3rd quarter. Northern Trust Corp now owns 4,866,933 shares of the airline’s stock worth $131,748,000 after purchasing an additional 32,089 shares during the period. 80.82% of the stock is currently owned by hedge funds and other institutional investors.

Southwest Airlines Price Performance

The company has a current ratio of 1.14, a quick ratio of 1.07 and a debt-to-equity ratio of 0.76. The company has a market capitalization of $15.93 billion, a PE ratio of 35.15, a price-to-earnings-growth ratio of 1.04 and a beta of 1.15. The stock’s 50-day moving average is $30.62 and its two-hundred day moving average is $28.54.

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.