Southwest Airlines (NYSE:LUV) Cut to “Reduce” at HSBC

HSBC cut shares of Southwest Airlines (NYSE:LUV) from a hold rating to a reduce rating in a research note published on Thursday, Marketbeat Ratings reports.

Several other research firms have also commented on LUV. Susquehanna reduced their price target on shares of Southwest Airlines from $34.00 to $25.00 and set a “neutral” rating for the company in a report on Monday, April 7th. Evercore ISI restated an “in-line” rating and issued a $40.00 price target on shares of Southwest Airlines in a report on Tuesday, July 15th. Barclays boosted their price objective on shares of Southwest Airlines from $26.00 to $34.00 and gave the stock an “equal weight” rating in a research note on Thursday, July 10th. Raymond James Financial reiterated an “outperform” rating and set a $40.00 price objective (down previously from $42.00) on shares of Southwest Airlines in a research note on Tuesday, April 29th. Finally, Jefferies Financial Group upgraded shares of Southwest Airlines from an “underperform” rating to a “hold” rating and boosted their price objective for the stock from $24.00 to $33.00 in a research note on Tuesday, May 27th. Seven research analysts have rated the stock with a sell rating, nine have assigned a hold rating and four have given a buy rating to the company. Based on data from MarketBeat.com, the company has a consensus rating of “Hold” and a consensus target price of $32.75.

Southwest Airlines Price Performance

Southwest Airlines stock opened at $33.21 on Thursday. The stock has a market cap of $18.92 billion, a price-to-earnings ratio of 50.31, a price-to-earnings-growth ratio of 5.08 and a beta of 1.21. The company has a debt-to-equity ratio of 0.51, a current ratio of 0.56 and a quick ratio of 0.72. Southwest Airlines has a 1 year low of $23.58 and a 1 year high of $37.96. The firm has a 50-day moving average of $33.52 and a two-hundred day moving average of $31.33.

Southwest Airlines (NYSE:LUV) last released its quarterly earnings data on Wednesday, July 23rd. The airline reported $0.43 earnings per share (EPS) for the quarter, missing the consensus estimate of $0.51 by ($0.08). Southwest Airlines had a net margin of 1.43% and a return on equity of 6.27%. The company had revenue of $7.24 billion during the quarter, compared to analysts’ expectations of $7.30 billion. During the same period last year, the firm earned $0.58 earnings per share. Southwest Airlines’s quarterly revenue was down 2.1% on a year-over-year basis. On average, research analysts forecast that Southwest Airlines will post 1.55 earnings per share for the current year.

Southwest Airlines announced that its Board of Directors has initiated a share buyback program on Wednesday, July 23rd that permits the company to buyback $2.00 billion in outstanding shares. This buyback authorization permits the airline to repurchase up to 9.4% of its shares through open market purchases. Shares buyback programs are usually a sign that the company’s board believes its stock is undervalued.

Southwest Airlines Announces Dividend

The company also recently declared a quarterly dividend, which was paid on Wednesday, July 9th. Investors of record on Wednesday, June 18th were issued a dividend of $0.18 per share. This represents a $0.72 dividend on an annualized basis and a yield of 2.17%. The ex-dividend date of this dividend was Wednesday, June 18th. Southwest Airlines’s dividend payout ratio (DPR) is presently 109.09%.

Insiders Place Their Bets

In related news, Director Gregg A. Saretsky acquired 3,670 shares of the firm’s stock in a transaction on Wednesday, April 30th. The shares were acquired at an average cost of $27.29 per share, with a total value of $100,154.30. Following the completion of the acquisition, the director directly owned 14,881 shares in the company, valued at approximately $406,102.49. This trade represents a 32.74% increase in their position. The transaction was disclosed in a document filed with the Securities & Exchange Commission, which is available through this link. Also, Director David P. Hess acquired 7,500 shares of the firm’s stock in a transaction on Monday, April 28th. The shares were bought at an average cost of $26.52 per share, for a total transaction of $198,900.00. Following the completion of the acquisition, the director owned 23,156 shares of the company’s stock, valued at approximately $614,097.12. This represents a 47.90% increase in their ownership of the stock. The disclosure for this purchase can be found here. Corporate insiders own 0.79% of the company’s stock.

Hedge Funds Weigh In On Southwest Airlines

Several hedge funds and other institutional investors have recently added to or reduced their stakes in the stock. Envestnet Portfolio Solutions Inc. raised its position in shares of Southwest Airlines by 42.9% in the fourth quarter. Envestnet Portfolio Solutions Inc. now owns 12,026 shares of the airline’s stock valued at $404,000 after buying an additional 3,608 shares during the last quarter. KLP Kapitalforvaltning AS acquired a new stake in Southwest Airlines during the fourth quarter worth about $2,434,000. Vanguard Group Inc. increased its position in Southwest Airlines by 0.6% during the fourth quarter. Vanguard Group Inc. now owns 68,653,945 shares of the airline’s stock worth $2,308,146,000 after purchasing an additional 426,878 shares during the last quarter. Korea Investment CORP boosted its stake in Southwest Airlines by 4,277.8% during the fourth quarter. Korea Investment CORP now owns 39,400 shares of the airline’s stock worth $1,325,000 after buying an additional 38,500 shares during the period. Finally, Mitsubishi UFJ Asset Management Co. Ltd. boosted its stake in Southwest Airlines by 11.0% during the fourth quarter. Mitsubishi UFJ Asset Management Co. Ltd. now owns 662,243 shares of the airline’s stock worth $22,258,000 after buying an additional 65,403 shares during the period. 80.82% of the stock is owned by hedge funds and other institutional investors.

Southwest Airlines Company Profile

Southwest Airlines Co operates as a passenger airline company that provides scheduled air transportation services in the United States and near-international markets. As of December 31, 2023, the company operated a total fleet of 817 Boeing 737 aircraft; and served 121 destinations in 42 states, the District of Columbia, and the Commonwealth of Puerto Rico, as well as ten near-international countries, including Mexico, Jamaica, the Bahamas, Aruba, the Dominican Republic, Costa Rica, Belize, Cuba, the Cayman Islands, and Turks and Caicos.