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Founded in 1967, Southwest Airlines Co. (LUV) is a prominent player in the airline industry, known for its low-cost travel model and commitment to customer service. Headquartered in Dallas, Texas, Southwest has a market cap of $18.4 billion and operates one of the largest domestic flight networks in the United States, serving millions of passengers with reliable and affordable air travel.
Shares of LUV have outperformed the broader market over the past year. The stock has gained 37.7% over this time frame, while the broader S&P 500 Index ($SPX) has rallied nearly 35.2%. However, in 2024, LUV is up 6% compared to SPX’s 20.1% rise on a YTD basis.
Zooming in further, LUV is trailing behind the U.S. Global Jets ETF (JETS). The exchange-traded fund has gained 21.7% on a YTD basis and returned 45% over the past 52 weeks.
Southwest Airlines has underperformed the broader market and its peers in 2024, primarily due to rising operational costs, increased competition, and lingering challenges from recent disruptions in its flight schedules. Also, Southwest Airlines' stock declined 5.6% after the company reported Q3 earnings on Oct. 24. Its operating revenue rose 5.3% year over year to $6.9 billion, but Q3 profit fell by two-thirds due to higher costs.
For the current fiscal year, ending in December, analysts expect LUV’s EPS to decline 55.4% year over year to $0.70. The company's earnings surprise history is mixed. It beat the consensus estimate in three of the last four quarters while missing the forecast on the other occasion.
Among the 17 analysts covering LUV stock, the consensus rating is a “Hold.” That’s based on four “Strong Buy” ratings, one “Moderate Buy,” nine “Holds,” and three “Strong Sells.
This configuration is more bullish than three months ago, with three analysts suggesting a “Strong Buy.”
On Oct. 28, Seaport Global analyst Daniel Mckenzie maintained a ‘Buy’ rating on Southwest Airlines, with a price target of $34, implying a potential upside of 11.1% from current levels.
Although the stock trades at a premium to the mean price target of 30.02, the Street-high price target of $40 suggests an upside potential of 30.7% to current price levels.
On the date of publication, Rashmi Kumari did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
