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Dallas, Texas-based Southwest Airlines Co. (LUV) is a passenger airline company that provides scheduled air transportation services. Valued at a market cap of $17.8 billion, the company also provides inflight entertainment and connectivity services, and Rapid Rewards loyalty program that enables program members to earn points for dollars spent on Southwest base fares.
Companies worth $10 billion or more are typically classified as “large-cap stocks,” and LUV fits the label perfectly, with its market cap exceeding this threshold, underscoring its size, influence, and dominance within the airlines industry. The company's strengths lie in its low-cost, point-to-point business model, which allows it to operate efficiently while offering competitive fares and high flight frequency on short- to medium-haul routes. Its strong focus on customer satisfaction and operational simplicity, such as free checked bags, no change fees, and open seating policies differentiate it from many legacy carriers.
This airlines company has dipped 13.7% from its 52-week high of $36.12, reached on Dec. 5, 2024. Shares of LUV have declined 3.8% over the past three months, underperforming the Nasdaq Composite’s ($NASX) 11.7% return during the same time frame.
Moreover, on a YTD basis, shares of LUV are down 7.3%, lagging behind NASX’s 1.2% uptick. Nonetheless, in the longer term, LUV has surged 9.6% over the past 52 weeks, slightly outpacing NASX’s 9.4% rise over the same time frame.
To confirm its bullish trend, LUV has been trading above its 200-day and 50-day moving averages since early May.
On Apr. 23, LUV reported stronger-than-expected Q1 results, demonstrating resilience despite a dynamic broader economic environment, which drove its share price up by 3.7% in the following trading session. Due to higher passenger revenue, the company’s total operating revenue grew 1.6% year-over-year to $6.4 billion and marginally exceeded analyst estimates. Adding to the uptick, its total operating expenses declined 1.1% from the year-ago quarter and led to a notable 63.9% decrease in its adjusted loss per share of $0.13. The bottom-line figure also exceeded the consensus estimates.
LUV has outpaced its rival, Delta Air Lines, Inc.’s (DAL) 4.1% decline over the past 52 weeks and 21.4% fall on a YTD basis.
Given LUV’s recent underperformance, analysts remain cautious about its prospects. The stock has a consensus rating of "Hold” from the 21 analysts covering it. While the company is trading above its mean price target of $29.95, its Street-high price target of $42 represents a 34.8% premium to its current price levels.
On the date of publication, Neharika Jain 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.
