LUV
Southwest Airlines shares fall as weak Q3 outlook overshadows earnings beat
Article Summary
BUY- Southwest Airlines Co. (NYSE: LUV) shares fell about 5% in early trading Thursday after the airline reported stronger-than-expected second-quarter results but issued a third-quarter earnings outlook that fell below Wall Street expectations.
- Southwest Airlines Co. reported adjusted earnings per share of $0.94 for the second quarter ahead of consensus estimates, with adjusted operating revenue reaching a record $8.7 billion, up 20.3% year over year, while managed business revenues reached an all-time quarterly record, rising 30%.
- Southwest Airlines Co.'s Rapid Rewards loyalty program also reached its largest size ever at nearly 100 million members, with new enrollments increasing 35% and record numbers of tier qualifiers.
- Southwest guided for third quarter adjusted earnings of $ 0.50-0.75, while lowering full-year 2026 adjusted EPS outlook to $3.25-4.25 from previous expectation of at least $4, citing higher fuel costs and broader uncertainty.
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Growth Stock Scoring Breakdown
| METRIC | VALUE | WEIGHT | ANALYSIS |
|---|---|---|---|
| Sales Growth TTM ? | 9.5% | 25% | 35.0 ptsBelow Screener (9.5%) - Weak growth |
| EPS Growth Next 5Y ? | 78.6% | 25% | 100.0 ptsExceptional (78.6%) - Very high expectations |
| Target Price Upside ? | 18.1% | 20% | 60.0 ptsModerate Upside (18.1%) - Target: $53.43 vs Current: $45.26 |
| Gross Margin % ? | 18.7% | 15% | 20.0 ptsThin (18.7%) - Low-margin business |
| Drawdown from 52-Wk High ? | -17.9% | 15% | 40.0 ptsMild Pullback (-17.9%) - Light entry opportunity |
Disclaimer: This rating is for informational purposes only and is not financial advice.
All data sourced from Finviz.
Always conduct your own research and consult with a financial advisor before making investment decisions.
Past performance does not guarantee future results.
About LUV
- Southwest Airlines Co. operates as a passenger airline company that provides scheduled air transportation services in the United States and internationally.
- It also provides Rapid Rewards loyalty program; SWABIZ, an online booking tool; and inflight entertainment platform that includes movies-on-demand live and on-demand television, flight tracker, and additional curated content, as well as a variety of premium snacks and coffee.
- In addition, the company offers ancillary services, such as in-flight purchases, baggage fees, EarlyBird Check-In, and upgraded boarding, as well as transportation of pets and unaccompanied minors.
- As of December 31, 2025, the company operated a total fleet of 803 Boeing 737 aircraft; and served 117 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.
- Southwest Airlines Co. was incorporated in 1967 and is headquartered in Dallas, Texas.