Top investors say Southwest Airlines Co. (LUV) ticks everything they need

Southwest Airlines Co. (NYSE: LUV) stock fell -2.76% on Friday to $34.12 against a previous-day closing price of $35.09. With 6.1 million shares changed hands, the volume of the stock remained heavier than its average volume of 5.62 million shares. During the session, the Airlines company that operates in wider Industrials sector, reached to the highest price of $35.27 whereas the lowest price it dropped to was $34.12. The 52-week range on LUV shows that it touched its highest point at $56.33 and its lowest point at $34.36 during that stretch. It currently has a 1-year price target of $52.20. Beta for the stock currently stands at 0.98.

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Price Performance and Earnings:

Stock performance is one of the indicators that investors use to determine whether they will profit from a stock. The price performance of LUV was down-trending over the past week, with a drop of -10.28%, but this was down by -8.94% over a month. Three-month performance dropped to -4.40% while six-month performance fell -20.76%. The stock lost -30.58% in the past year, while it has lost -20.35% so far this year. A look at the trailing 12-month EPS for LUV yields 1.57 with Next year EPS estimates of 3.04. For the next quarter, that number is 0.45. This implies an EPS growth rate of 129.50% for this year and 44.47% for next year.

Float and Shares Shorts:

At present, 593.00 million LUV shares are outstanding with a float of 591.27 million shares on hand for trading. On Jul 14, 2022, short shares totaled 10.21 million, which was 1.72% higher than short shares on Jun 14, 2022. In addition to Mr. Gary C. Kelly as the firm’s Exec. Chairman, Mr. Robert E. Jordan serves as its CEO & Director.

Institutional Ownership:

Through their ownership of 80.01% of LUV’s outstanding shares, institutional investors have majority control over the company. Other institutions hold 47.54% of LUV, in contrast to 29.98% held by mutual funds. Shares owned by individuals account for 10.26%. As the largest shareholder in LUV with 10.54% of the stake, The Vanguard Group, Inc. holds 62,508,202 shares worth 62,508,202. A second-largest stockholder of LUV, PRIMECAP Management Co., holds 52,919,924 shares, controlling over 8.92% of the firm’s shares. SSgA Funds Management, Inc. is the third largest shareholder in LUV, holding 40,111,867 shares or 6.76% stake. With a 4.43% stake in LUV, the Vanguard PRIMECAP Fund is the largest stakeholder. A total of 26,257,478 shares are owned by the mutual fund manager. The Vanguard Total Stock Market Index, which owns about 2.96% of LUV stock, is the second-largest Mutual Fund holder. It holds 17,566,246 shares valued at 644.68 million. Vanguard Mid Cap Index Fund holds 2.29% of the stake in LUV, owning 13,614,384 shares worth 499.65 million.

Analysts Ratings:

Reading analyst opinions is an effective way to decide where to invest, and there are several opinions available for LUV since 20 analysts follow the stock currently. There are 12 analysts who recommend BUY ratings, while 0 suggest SELL ratings. Of the remaining analysts, 5 believe that the stock is worth HOLDING, 3 give it an OVERWEIGHT rating, and 0 thinks that it’s UNDERWEIGHT. In the same way, a target price assigned to a stock can also reveal much about its potential. With LUV analysts setting a high price target of $66.00 and a low target of $39.00, the average target price over the next 12 months is $50.44. Based on these targets, LUV could surge 93.43% to reach the target high and rise by 14.3% to reach the target low. Reaching the average price target will result in a growth of 47.83% from current levels.

EPS: Estimates vs Actual

It is also common to use earnings estimates to evaluate a firm’s growth potential and to determine trading strategy. LUV will report FY 2022 earnings on 01/26/2023. Analysts have provided yearly estimates in a range of $3.43 being high and $1.70 being low. For LUV, this leads to a yearly average estimate of $2.19. The earnings surprise of a firm occurs when the actual results change from the consensus earnings estimate. Southwest Airlines Co. surprised analysts by $0.13 when it reported $1.30 EPS against a consensus estimate of $1.17. The surprise factor in the prior quarter was -$0.02. Based on analyst estimates, the high estimate for the next quarter is $1.29 and the low estimate is $0.30. The average estimate for the next quarter is thus $0.50.

Summary of Insider Activity:

Insiders traded LUV stock several times over the past three months with 0 Buys and 0 Sells. In these transactions, 0 shares were bought while 0 shares were sold. The number of buy transactions has increased to 18 while that of sell transactions has risen to 21 over the past year. The total number of shares bought during that period was 209,109 while 94,682 shares were sold.

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