Stock Traders Purchase High Volume of Call Options on Southwest Airlines (NYSE:LUV)

Southwest Airlines Co. (NYSE:LUV) was the target of some unusual options trading on Thursday. Investors bought 47,042 call options on the company. This is an increase of approximately 114% compared to the average daily volume of 21,963 call options.

Wall Street Analyst Weigh In

LUV has been the subject of several research analyst reports. HSBC lowered Southwest Airlines from a “hold” rating to a “reduce” rating in a research report on Thursday, July 24th. UBS Group raised their price target on Southwest Airlines from $27.00 to $34.00 and gave the stock a “neutral” rating in a research report on Monday, July 7th. Hsbc Global Res upgraded Southwest Airlines to a “moderate sell” rating in a research report on Thursday, July 24th. JPMorgan Chase & Co. raised their price target on Southwest Airlines from $28.00 to $35.00 and gave the stock an “overweight” rating in a research report on Friday, September 12th. Finally, Barclays raised their price target on Southwest Airlines from $26.00 to $34.00 and gave the stock an “equal weight” rating in a research report on Thursday, July 10th. Five research analysts have rated the stock with a Buy rating, ten have given a Hold rating and four have given a Sell rating to the company’s stock. According to MarketBeat, Southwest Airlines has a consensus rating of “Hold” and a consensus price target of $33.38.

Southwest Airlines Stock Down 2.2%

Shares of NYSE LUV opened at $31.72 on Friday. The stock has a market cap of $16.66 billion, a P/E ratio of 48.06, a PEG ratio of 0.85 and a beta of 1.21. The company has a current ratio of 0.56, a quick ratio of 0.49 and a debt-to-equity ratio of 0.51. Southwest Airlines has a 12-month low of $23.82 and a 12-month high of $37.96. The business’s fifty day simple moving average is $31.72 and its 200-day simple moving average is $31.48.

Southwest Airlines (NYSE:LUV) last posted its quarterly earnings results on Wednesday, July 23rd. The airline reported $0.43 earnings per share for the quarter, missing analysts’ consensus estimates of $0.51 by ($0.08). Southwest Airlines had a net margin of 1.43% and a return on equity of 6.27%. The business had revenue of $7.24 billion during the quarter, compared to analyst estimates of $7.30 billion. During the same quarter in the prior year, the business earned $0.58 earnings per share. The firm’s quarterly revenue was down 2.1% on a year-over-year basis. As a group, equities analysts predict that Southwest Airlines will post 1.55 EPS for the current fiscal year.

Southwest Airlines announced that its board has approved 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 reacquire up to 9.4% of its stock through open market purchases. Stock buyback programs are usually a sign that the company’s board believes its shares are undervalued.

Southwest Airlines Dividend Announcement

The company also recently announced a quarterly dividend, which was paid on Wednesday, September 24th. Stockholders of record on Wednesday, September 3rd were given a dividend of $0.18 per share. The ex-dividend date was Wednesday, September 3rd. This represents a $0.72 dividend on an annualized basis and a dividend yield of 2.3%. Southwest Airlines’s payout ratio is 109.09%.

Insider Buying and Selling

In related news, Director Sarah Feinberg purchased 1,500 shares of the company’s stock in a transaction dated Tuesday, August 5th. The stock was acquired at an average cost of $30.01 per share, for a total transaction of $45,015.00. Following the completion of the transaction, the director directly owned 14,229 shares of the company’s stock, valued at approximately $427,012.29. This trade represents a 11.78% increase in their ownership of the stock. The transaction was disclosed in a legal filing with the Securities & Exchange Commission, which is available through this link. Also, Director Gregg A. Saretsky acquired 3,345 shares of the stock in a transaction that occurred on Wednesday, August 6th. The stock was acquired at an average price of $30.03 per share, with a total value of $100,450.35. Following the completion of the transaction, the director directly owned 23,644 shares of the company’s stock, valued at $710,029.32. This trade represents a 16.48% increase in their position. The disclosure for this purchase can be found here. 0.79% of the stock is owned by corporate insiders.

Institutional Trading of Southwest Airlines

A number of hedge funds and other institutional investors have recently made changes to their positions in LUV. Ameriflex Group Inc. grew its holdings in shares of Southwest Airlines by 7.1% during the 2nd quarter. Ameriflex Group Inc. now owns 4,690 shares of the airline’s stock valued at $148,000 after purchasing an additional 310 shares during the last quarter. Benjamin Edwards Inc. grew its holdings in Southwest Airlines by 1.4% during the 2nd quarter. Benjamin Edwards Inc. now owns 24,857 shares of the airline’s stock worth $806,000 after acquiring an additional 333 shares during the last quarter. Copperwynd Financial LLC grew its holdings in Southwest Airlines by 2.1% during the 1st quarter. Copperwynd Financial LLC now owns 16,301 shares of the airline’s stock worth $547,000 after acquiring an additional 337 shares during the last quarter. GAMMA Investing LLC grew its holdings in Southwest Airlines by 2.4% during the 3rd quarter. GAMMA Investing LLC now owns 14,285 shares of the airline’s stock worth $456,000 after acquiring an additional 341 shares during the last quarter. Finally, PNC Financial Services Group Inc. grew its holdings in Southwest Airlines by 0.5% during the 1st quarter. PNC Financial Services Group Inc. now owns 76,719 shares of the airline’s stock worth $2,576,000 after acquiring an additional 345 shares during the last quarter. Institutional investors and hedge funds own 80.82% of the company’s stock.

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.