The Case for and Against Southwest Airlines Co. (LUV)

Southwest Airlines Co. (LUV) is an interesting player in the Services space, with a focus on Regional Airlines. The stock has been active on the tape, currently trading at $60.33, up from yesterday’s close by 0.95%. Given the stock’s recent action, it seemed like a good time to take a closer look at the company’s recent data.

Fundamental Analysis

Southwest Airlines Co. (LUV) currently trades with a market capitalization of $35.53 Billion. That value represents a market adjusting for revenues that have been growing by 3.92 % on a quarterly year/year basis as of the company’s last quarterly report.

You can get a sense of how sustainable that is by a levered free cash flow of $1.68 Billion over the past twelve months. Generally speaking, earnings are expected to grow in coming quarters. Analysts are forecasting earnings of $0.82 on a per share basis this quarter. Perhaps, that suggests something about why 0.98% of the outstanding share supply is held by institutional investors.

Technical Analysis

No analysis is ever complete without a thorough survey of a stock’s technical behavior. Looking at the stock’s movement on the chart, Southwest Airlines Co. recorded a 52-week high of $66.99. It is now trading 6.66% off that level. The stock is trading $60.55 its 50-day moving average by 0.22%. The stock carved out a 52-week low down at $49.76.

In recent action, Southwest Airlines Co. (LUV) has made a move of +6.20% over the past month, which has come on weak relative transaction volume. Over the trailing year, the stock is underperforming the S&P 500 by 16.68, and it’s gotten there by action that has been more volatile on a day-to-day basis than most other stocks on the exchange. In terms of the mechanics underlying that movement, traders will want to note that the stock is trading on a float of 1.69% with $586.88 Million sitting short, betting on future declines. That suggests something of the likelihood of a short squeeze in shares of LUV.

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