How Is Southwest Airlines Co. (LUV)’s Price-To-Earnings Ratio?


As of Wednesday close, Southwest Airlines Co.’s (NYSE:LUV) stock was up $0.46, moving up 1.21 percent to $38.63. The average number of shares traded per day over the past five days has been 3,396,520 shares. 3 times new highs have been achieved over the past 5 days, with a $0.64 gain in that time frame. In the last twenty days, the average volume was 5,565,750, while in the previous 50 days, it was 6,096,878.

Since last month, LUV stock rose 11.58%. Shares of the company fell to $32.97 on 10/24/22, the lowest level in the past month. A 52-week high of $50.10 was reached on 04/21/22 after having rallying from a 52-week low of $30.20. Since the beginning of this year, LUV’s stock price has dropped by -9.83% or -$4.21, and marked a new high 9 times. However, the stock has declined by -22.89% since its 52-week high.

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LUV stock investors should be aware that Southwest Airlines Co. (LUV) stock had its last reported insider trading activity 15 days ago on Nov 10. MONTFORD JOHN T, the Director of the company, disposed of 2,250 shares for $38.87 on Nov 10. It resulted in a $87,458 divestment by the insider. MONTFORD JOHN T sold 2,300 shares at an average price of $45.70 on May 27. The insider now owns 23,296 shares following the transaction. On Dec 09, Director MONTFORD JOHN T sold 540 shares at $43.88 apiece. The transaction was valued at $23,697.

Valuation Metrics

Right now, Southwest Airlines Co. (LUV) has a P/E ratio of about 30.35. The stock’s beta is 1.06. Besides these, the trailing price-to-sales (P/S) ratio of 1.00, the price-to-book (PB) ratio of 2.10, and the price-to-cash flow ratio of 6.58 may also be considered.

The latest dividend of $0.18 per share was paid out, remained unchanged from last year’s $0.18.

Financial Health

In the three months ended September 29, Southwest Airlines Co.’s quick ratio stood at 1.50, while its current ratio was 1.60, showing that the company is able to pay off its debt. According to company report, the long-term debt-to-equity ratio for the quarter ending September 29 was 0.76, and the total debt-to-equity ratio was 0.80. On the profitability front, the trailing twelve-month gross margin is 69.50% percent. In the year ended September 29, operating margins totaled 6.10%. Based on annual data, LUV earned $5.39 billion in gross profit and brought in $15.79 billion in revenue.

A company’s management is another factor that investors consider when determining the profitability of an investment. In the past year, return on investment (ROI) was 6.40%. Return on equity (ROE) for the past 12 months was 7.70%.

In Southwest Airlines Co.’s quarter-end financial report for September 29, it reported total debt of $8.31 billion against cash and short-term investments of $3.23 billion. According to the earnings report, the company had a lower net income in the recent quarter than it did in the previous quarter. LUV’s revenue rose 24.77% to $6.73 billion during the quarter, while net income inched up to $6.22 billion. While analysts expected Southwest Airlines Co. to report $0.42 quarterly earnings, the actual figure was $0.5 per share, beating the consensus estimate by 19.00%. During the quarter, the company generated $730.0 million in EBITDA. The liabilities of Southwest Airlines Co. were 25.02 billion at the end of its most recent quarter ended September 29, and its total debt was $12.0 billion. The value of shareholders’ equity is $593.75 million.

Technical Picture

This quick technical analysis looks at Southwest Airlines Co.’s (LUV) price momentum. With a historical volatility rate of 22.66%, the RSI 9-day stood at 64.68% on 23 November.

With respect to its five-day moving average, the current Southwest Airlines Co. price is up by +1.68% percent or $0.64. At present, LUV shares trade +12.39% above its 20-day simple moving average and +5.81% percent above its 100-day simple moving average. However, the stock is currently trading approximately +1.58% above its SMA50 and -16.15% below its SMA200.

Stochastic coefficient K was 68.57% and Stochastic coefficient D was 65.89%, while ATR was 0.97. Given the Stochastic reading of 74.49% for the 14-day period, the RSI (14) reading has been calculated as 63.62%. As of today, the MACD Oscillator reading stands at 0.07, while the 14-day reading stands at 0.26.

Analyst Ratings

Southwest Airlines Co. downgraded its rating on Southwest Airlines Co. (NYSE: LUV) to a Hold in a note to investors on August 15, 2022. The analysts firm previously had a Buy rating on the stock.Southwest Airlines Co. (LUV) has been rated Overweight by analysts. According to 0 brokerage firms, LUV is a sell, and 5 firms recommend it is a Hold. There are 0 analysts who say the stock is underweight. A total of 3 analysts rate Southwest Airlines Co. stock as buy, with 13 recommending it as overweight.

With a median target price of $46.50, the current consensus forecast for the stock is $39.00 – $66.00. Based on these forecasts, analysts predict Southwest Airlines Co. (LUV) will achieve an average price target of $49.06.


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