Southwest Airlines Co. (NYSE: LUV) operates as a passenger airline that provides scheduled air transportation in the United States. As of December 31, 2010, the company operated 548 Boeing 737 aircraft and provided service to 69 cities in 35 states. It also sells frequent flyer credits and related services to companies participating in its Rapid Rewards frequent flyer program, such as car rental agencies, hotels, restaurants, and retail locations. The company was founded in 1967 and is headquartered in Dallas, Texas.
Consensus Estimates: $0.07
Earnings Whisper: n/a
Revenue Growth: Dec 2011- 32.20% March 2012- 29.30%
Analysts Recommendations: Buy
Median Target: 12.00
LUV is one of the only major airlines that did not declare bankruptcy and it has been profitable for a long time. It is expected to grow through the first quarter of this year. It appears how to invest in LUV runs the gamut with analysts:
- Equities research analysts at UBS AG cut their earnings per share (EPS) estimates on shares of Southwest Airlines in a research note issued to investors on Tuesday. They currently have a "neutral" rating and a $9.50 price target on the company's shares.
- Separately, analysts at Citigroup reiterated a "buy" rating on shares of Southwest Airlines in a research note to investors on Tuesday, December 13rd.
- Analysts at Rodman & Renshaw reiterated an "outperform" rating on shares of Southwest Airlines in a research note to investors on Monday, November 21st. They now have a $12.00 price target on the stock.
- Analysts at Maxim Group initiated coverage on shares of Southwest Airlines in a research note to investors on Monday, November 14th. They set a "hold" rating on the stock.
We go from neutral, buy, to outperform. Target prices go from 9.50 to 12.00. On the bright side, LUV will stay strong. Last month the company flew 8.2 billion revenue miles, which was stead from the previous year.
Investing in Southwest
For a long term investment, we believe that LUV will continue to be subjected to the economy. The company has been building a foundation while it has been in a trading zone since early April of 2011, trading consistently between 7.4 and 8.9 up to the writing of this article. The foundation is strong and we are expecting a move at least up through 10 by the summer. For option trades, we really like buying a June 10 2012 call option straight up (presently priced at $.35). The prices are reasonable and the stock looks healthy enough to move that high with the U.S. economy news recently looking rosy.