Analysts Raise Southwest Airlines’ FY2025 Earnings Forecast to $1.16

Investment analysts at Seaport Res Ptn have raised their earnings estimates for Southwest Airlines Co. (NYSE: LUV) for the fiscal year 2025. In a report released on October 22, 2023, analyst D. Mckenzie projected the airline’s earnings per share (EPS) to be $1.16, an increase from the previous estimate of $1.06. The consensus estimate for Southwest Airlines’ earnings currently stands at $1.55 per share for the full year.

Several analysts have recently adjusted their ratings and price targets for Southwest Airlines. On October 3, 2023, Susquehanna raised its price target from $30.00 to $35.00, maintaining a “neutral” rating. Conversely, UBS Group reduced its price target from $35.00 to $33.00 while also issuing a “neutral” rating on October 24, 2023. In a contrasting move, HSBC downgraded the airline from a “hold” to a “reduce” rating on July 24, 2023.

Currently, among analysts covering the stock, four have assigned a “buy” rating, ten have given a “hold” rating, and five have issued a “sell” recommendation. According to data from MarketBeat.com, Southwest Airlines has a consensus rating of “reduce” with an average price target of $33.38.

Stock Performance and Financial Metrics

On October 23, 2023, Southwest Airlines’ stock opened at $31.07, reflecting a decline of 3.7%. The company’s moving averages indicate a 50-day average of $32.38 and a 200-day average of $31.78. Southwest Airlines’ financial ratios reveal a debt-to-equity ratio of 0.52, a quick ratio of 0.42, and a current ratio of 0.49. The airline has experienced a 52-week low of $23.82 and a high of $37.96. Its market capitalization stands at $16.07 billion, with a price-to-earnings ratio of 47.80 and a PEG ratio of 0.79.

The last earnings report from Southwest Airlines was released on February 6, 2023, where the airline reported an EPS of ($0.38) for the quarter. The firm recorded a return on equity of 6.39% and a net margin of 1.38%, with quarterly revenue amounting to $6.17 billion.

Institutional Holdings and Insider Activity

Recent activity among institutional investors indicates a shift in holdings for Southwest Airlines. Ameriflex Group Inc. increased its shares by 7.1% in the second quarter, now owning 4,690 shares valued at $148,000. Benjamin Edwards Inc. also raised its stake by 1.4%, bringing its total to 24,857 shares worth $806,000. Other firms, such as Copperwynd Financial LLC and GAMMA Investing LLC, have similarly increased their holdings.

Currently, institutional investors and hedge funds own approximately 80.82% of Southwest Airlines’ stock. Insider transactions have further shaped the ownership landscape. On August 6, 2023, Director Gregg A. Saretsky purchased 3,345 shares at an average cost of $30.03 each, totaling $100,450.35. This acquisition raised his total holdings to 23,644 shares, valued at $710,029.32. Similarly, Director Sarah Feinberg acquired 1,500 shares at an average price of $30.01, increasing her stake by 11.78%.

Dividend and Share Repurchase Program

Southwest Airlines recently declared a quarterly dividend of $0.18, which was paid on September 24, 2023. Stockholders of record as of September 3, 2023 received this dividend, leading to an annualized dividend yield of 2.3%. The company’s dividend payout ratio is currently noted at 110.77%.

In addition, the Board of Directors authorized a share repurchase program on July 23, 2023, allowing the company to buy back up to $2.00 billion in outstanding shares, representing approximately 9.4% of its shares through open market purchases. This program often indicates that company leaders believe their shares are undervalued.

Southwest Airlines continues to operate as a major player in the passenger airline industry, providing scheduled air transportation services across the United States and near-international markets. As of December 31, 2023, the company operated a fleet of 817 Boeing 737 aircraft, serving 121 destinations across 42 states and several near-international locations including Mexico and the Caribbean.