Southwest Airlines Co. (NYSE: LUV) Has Great Upside Potential

Southwest Airlines Co. (NYSE:LUV) shares, rose in value on Friday, May 26, with the stock price up by 1.88% to the previous day’s close as strong demand from buyers drove the stock to $29.79.

Actively observing the price movement in the recent trading, the stock is buoying the session at $29.24, falling within a range of $28.88 and $29.42. The value of beta (5-year monthly) is 1.14 whereas the PE ratio is 29.48 over 12-month period. Referring to stock’s 52-week performance, its high was $46.46, and the low was $28.40. On the whole, LUV has fluctuated by -0.30% over the past month.

With the market capitalization of Southwest Airlines Co. currently standing at about $17.68 billion, investors are eagerly awaiting this quarter’s results, scheduled for Jul 27, 2023. The company’s Forward Dividend Ratio is 0.72, with its dividend yield at 2.46%. As a result, investors might want to see an improvement in the stock’s price before the company announces its earnings report. Analysts are projecting the company’s earnings per share (EPS) to be $1.06, which is expected to increase to $1.43 for fiscal year $2.65 and then to about $3.79 by fiscal year 2024. Data indicates that the EPS growth is expected to be 128.40% in 2024, while the next year’s EPS growth is forecast to be 43.00%.

Analysts have estimated the company’s revenue for the quarter at $6.94 billion, with a low estimate of $6.83 billion and a high estimate of $7.01 billion. According to the average forecast, sales growth in current quarter could jump up 3.20%, compared to the corresponding quarter of last year. Wall Street analysts also predicted that in 2024, the company’s y-o-y revenues would reach $26.62 billion, representing an increase of 11.80% from the revenues reported in the last year’s results.

Revisions could be a useful indicator to get insight on short-term price movement; so for the company, there were no upward and no downward review(s) in last seven days. We see that LUV’s technical picture suggests that short-term indicators denote the stock is a 50% Sell on average. However, medium term indicators have put the stock in the category of 100% Sell while long term indicators on average have been pointing out that it is a 100% Sell.

22 analyst(s) have assigned their ratings of the stock’s forecast evaluation on a scale of 1.00-5.00 to indicate a strong buy to a strong sell recommendation. The stock is rated as a Hold by 10 analyst(s), 9 recommend it as a Buy and 2 called the LUV stock Overweight. In the meantime, 1 analyst(s) believe the stock as Underweight and 0 think it is a Sell. Thus, investors eager to increase their holdings of the company’s stock will have an opportunity to do so as the average rating for the stock is Overweight.

The stock’s technical analysis shows that the PEG ratio is about 0.52, with the price of LUV currently trading nearly 0.89% and -2.71% away from the simple moving averages for 20 and 50 days respectively. The Relative Strength Index (RSI, 14) currently indicates a reading of 48.72, while the 7-day volatility ratio is showing 2.27% which for the 30-day chart, stands at 2.68%. Furthermore, Southwest Airlines Co. (LUV)’s beta value is 1.14, and its average true range (ATR) is 0.80. The company’s stock has been forecasted to trade at an average price of $40.31 over the course of the next 52 weeks, with a low of $32.00 and a high of $63.00. Based on these price targets, the low is -7.42% off current price, whereas the price has to move -111.48% to reach the yearly target high. Additionally, analysts’ median price of $39.00 is likely to be welcomed by investors because it represents a decrease of -30.92% from the current levels.

A comparison of Southwest Airlines Co. (LUV) with its peers suggests the former has fared considerably weaker in the market. LUV showed an intraday change of 1.88% in today’s session so far, and over the past year, it shrunk by -29.82%%. In comparison, Delta Air Lines Inc. (DAL) has moved higher at 1.23% today and is down -6.24% over the past 12 months. On the other hand, the price of United Airlines Holdings Inc. (UAL) has risen 1.22% today. The stock, however, is off 11.56% from where it was a year ago. Additionally, there is a gain of 0.87% for American Airlines Group Inc. (AAL) in recent trading while the stock has seen an overall depriciation of -10.07%% over the past year. The PE ratio stands at 29.48 for Southwest Airlines Co., compared to 12.09 for Delta Air Lines Inc., and 8.29 for United Airlines Holdings Inc. Other than that, the overall performance of the S&P 500 during the today’s session so far shows that it gained 1.04%. Meanwhile, the Dow Jones Industrial Improved by 0.91%.

Data on historical trading for Southwest Airlines Co. (NYSE:LUV) indicates that the trading volumes over the past 10 days have averaged 5.83 million and over the past 3 months, they’ve averaged 7.01 million. According to company’s latest data on outstanding shares, there are 594.00 million shares outstanding.

Nearly 0.10% of Southwest Airlines Co.’s shares belong to company insiders and institutional investors own 76.10% of the company’s shares. The data on short interest also indicates that stock shorts accounted for 17.3 million shares as on May 14, 2023, resulting in a short ratio of 2.21. According to the data, the short interest in Southwest Airlines Co. (LUV) stood at 2.91% of shares outstanding as of May 14, 2023; the number of short shares registered in Apr 13, 2023 reached 13.52 million. The stock has fallen by -11.52% since the beginning of the year, thereby showing the potential of a further growth. This could raise investors’ confidence to be optimistic about the LUV stock heading into the next quarter.