Southwest Airlines (LUV) closed at $33.93 in the latest trading session, marking a -1.02% move from the prior day. This change lagged the S&P 500’s 0.77% loss on the day. Meanwhile, the Dow lost 0.65%, and the Nasdaq, a tech-heavy index, lost 2.23%.
Coming into today, shares of the airline had gained 17.24% in the past month. In that same time, the Transportation sector gained 3.4%, while the S&P 500 gained 4.66%.
Investors will be hoping for strength from Southwest Airlines as it approaches its next earnings release, which is expected to be July 27, 2023. The company is expected to report EPS of $1, down 23.08% from the prior-year quarter. Our most recent consensus estimate is calling for quarterly revenue of $6.97 billion, up 3.56% from the year-ago period.
LUV’s full-year Zacks Consensus Estimates are calling for earnings of $2.62 per share and revenue of $26.73 billion. These results would represent year-over-year changes of +125.86% and +12.25%, respectively.
Investors should also note any recent changes to analyst estimates for Southwest Airlines. Recent revisions tend to reflect the latest near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company’s business outlook.
Research indicates that these estimate revisions are directly correlated with near-term share price momentum. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.
The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection has moved 0.19% lower. Southwest Airlines is holding a Zacks Rank of #3 (Hold) right now.
Investors should also note Southwest Airlines’s current valuation metrics, including its Forward P/E ratio of 13.11. This valuation marks a premium compared to its industry’s average Forward P/E of 10.8.
It is also worth noting that LUV currently has a PEG ratio of 0.41. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company’s expected earnings growth rate into account. The Transportation – Airline was holding an average PEG ratio of 0.33 at yesterday’s closing price.
The Transportation – Airline industry is part of the Transportation sector. This group has a Zacks Industry Rank of 49, putting it in the top 20% of all 250+ industries.
The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.
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