Southwest Airlines (LUV) Dips More Than Broader Markets: What You Should Know

Southwest Airlines (LUV) closed at $36.18 in the latest trading session, marking a -1.28% move from the prior day. This change lagged the S&P 500's daily loss of 0.07%. At the same time, the Dow added 0.27%, and the tech-heavy Nasdaq gained 0.02%.

Prior to today's trading, shares of the airline had lost 20.08% over the past month. This has lagged the Transportation sector's loss of 6.52% and the S&P 500's loss of 7.99% in that time.

Wall Street will be looking for positivity from Southwest Airlines as it approaches its next earnings report date. This is expected to be July 28, 2022. The company is expected to report EPS of $1.12, up 420% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $6.71 billion, up 67.51% from the prior-year quarter.

For the full year, our Zacks Consensus Estimates are projecting earnings of $2.58 per share and revenue of $24.28 billion, which would represent changes of +220% and +53.79%, respectively, from the prior year.

Investors might also notice recent changes to analyst estimates for Southwest Airlines. Recent revisions tend to reflect the latest near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 2.41% lower. Southwest Airlines is currently sporting a Zacks Rank of #3 (Hold).

Valuation is also important, so investors should note that Southwest Airlines has a Forward P/E ratio of 14.23 right now. This represents a discount compared to its industry's average Forward P/E of 16.

It is also worth noting that LUV currently has a PEG ratio of 2.37. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. Transportation - Airline stocks are, on average, holding a PEG ratio of 1.5 based on yesterday's closing prices.

The Transportation - Airline industry is part of the Transportation sector. This group has a Zacks Industry Rank of 197, putting it in the bottom 23% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.

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