Southwest Airlines (NYSE:LUV) Reaches New 1-Year High Following Better-Than-Expected Earnings

Southwest Airlines Co. (NYSE:LUV) shares hit a new 52-week high on Thursday following a stronger than expected earnings report. The company traded as high as $46.14 and last traded at $45.7610, with a volume of 8915267 shares changing hands. The stock had previously closed at $40.86.

The airline reported $0.58 earnings per share (EPS) for the quarter, topping the consensus estimate of $0.56 by $0.02. Southwest Airlines had a net margin of 1.57% and a return on equity of 6.11%. The business had revenue of $7.44 billion during the quarter, compared to the consensus estimate of $7.51 billion. During the same period in the prior year, the firm earned $0.56 EPS. Southwest Airlines’s quarterly revenue was up 7.4% compared to the same quarter last year. Southwest Airlines has set its FY 2026 guidance at 4.000- EPS and its Q1 2026 guidance at 0.450- EPS.

Southwest Airlines Announces Dividend

The company also recently declared a quarterly dividend, which was paid on Friday, January 16th. Shareholders of record on Friday, December 26th were issued a dividend of $0.18 per share. This represents a $0.72 dividend on an annualized basis and a yield of 1.5%. The ex-dividend date was Friday, December 26th. Southwest Airlines’s dividend payout ratio is 110.77%.

Key Stories Impacting Southwest Airlines

Here are the key news stories impacting Southwest Airlines this week:

• Positive Sentiment: Company set FY‑2026 adjusted EPS guidance of at least $4.00 (more than 300% above 2025), signaling a large profit ramp driven by its business transformation; management says momentum in bookings supports the outlook. Read More.
• Positive Sentiment: End of open seating and introduction of assigned seats plus new ancillary fees (bags, seat selection, extra legroom) are expected to materially boost unit revenues and margins — investors see this as a sustainable revenue lever. Read More.
• Positive Sentiment: Q4 EPS modestly beat estimates (EPS topped consensus) and operating profit improved YoY, which together with the guidance reduced near‑term execution concerns for many investors. Read More.
• Neutral Sentiment: Revenue in the quarter trailed some expectations (mixed top‑line vs. estimates), so upside rests on management executing the revenue initiatives and sustaining rate trends. Read More.
• Neutral Sentiment: Analysts are re‑rating and updating targets: some price targets were raised while ratings remain mixed — consensus targets still show dispersion, suggesting investor opinion is split on valuation vs. execution risk. Read More.
• Negative Sentiment: Q1 2026 EPS guidance (0.45) came in below some street estimates, creating a near‑term execution risk window even as full‑year guidance is strong. Read More.
• Negative Sentiment: Unusual options activity showed heavy put buying around the report, indicating some traders hedged or bet on downside volatility despite the upbeat guidance. (No single article link available)

Analyst Upgrades and Downgrades

Several brokerages recently weighed in on LUV. TD Cowen increased their target price on Southwest Airlines from $31.00 to $42.00 and gave the company a “hold” rating in a research note on Friday, December 12th. Deutsche Bank Aktiengesellschaft upped their price target on Southwest Airlines from $40.00 to $48.00 and gave the stock a “buy” rating in a report on Friday, December 12th. Susquehanna raised their price objective on shares of Southwest Airlines from $35.00 to $45.00 and gave the stock a “neutral” rating in a research note on Friday, January 9th. BMO Capital Markets started coverage on shares of Southwest Airlines in a research report on Tuesday, December 9th. They set a “market perform” rating and a $43.00 target price on the stock. Finally, Weiss Ratings reissued a “hold (c)” rating on shares of Southwest Airlines in a report on Monday, December 29th. Six equities research analysts have rated the stock with a Buy rating, eleven have assigned a Hold rating and four have issued a Sell rating to the company. According to data from MarketBeat.com, the company presently has an average rating of “Hold” and a consensus target price of $42.63.

Institutional Investors Weigh In On Southwest Airlines

Institutional investors have recently bought and sold shares of the business. Ameriprise Financial Inc. raised its stake in shares of Southwest Airlines by 43.7% in the 3rd quarter. Ameriprise Financial Inc. now owns 12,335,167 shares of the airline’s stock valued at $393,615,000 after buying an additional 3,753,183 shares in the last quarter. JPMorgan Chase & Co. increased its stake in Southwest Airlines by 13.6% in the third quarter. JPMorgan Chase & Co. now owns 12,218,086 shares of the airline’s stock valued at $389,879,000 after acquiring an additional 1,459,235 shares during the period. Artisan Partners Limited Partnership raised its position in Southwest Airlines by 0.9% in the second quarter. Artisan Partners Limited Partnership now owns 10,763,935 shares of the airline’s stock worth $349,182,000 after purchasing an additional 98,290 shares in the last quarter. Arrowstreet Capital Limited Partnership lifted its stake in Southwest Airlines by 2,403.8% during the second quarter. Arrowstreet Capital Limited Partnership now owns 10,120,368 shares of the airline’s stock worth $328,305,000 after purchasing an additional 9,716,160 shares during the period. Finally, Invesco Ltd. boosted its holdings in Southwest Airlines by 9.2% during the third quarter. Invesco Ltd. now owns 6,837,197 shares of the airline’s stock valued at $218,175,000 after purchasing an additional 577,326 shares in the last quarter. Institutional investors and hedge funds own 80.82% of the company’s stock.

Southwest Airlines Stock Up 18.5%

The company has a market capitalization of $25.05 billion, a price-to-earnings ratio of 57.66, a P/E/G ratio of 0.37 and a beta of 1.16. The business has a fifty day simple moving average of $40.42 and a two-hundred day simple moving average of $35.14. The company has a quick ratio of 0.42, a current ratio of 0.49 and a debt-to-equity ratio of 0.52.

About Southwest Airlines

Southwest Airlines Co is a U.S.-based low-cost carrier that operates a point-to-point domestic and near-international airline network. Headquartered in Dallas, Texas, the company primarily flies Boeing 737 aircraft and offers no-frills, single-class service designed to keep fares competitive. Southwest’s operating model emphasizes high aircraft utilization, quick turnaround times and an open seating policy, allowing customers to board and select seats on a first-come, first-served basis.

Founded in 1967 by Herb Kelleher and Rollin King as Air Southwest Company, Southwest began commercial service in 1971, initially connecting Dallas, Houston and San Antonio.