Recommendation: Buy
| Entry Date | Symbol | Recommendation | Entry Price (USD) | Target 1 (USD) | Target 2 (USD) | Holding Duration | Position Status | Return(%)* |
|---|---|---|---|---|---|---|---|---|
| 17 Jun, 26 | LUV | Buy | USD 47.43 | USD 50.0 | USD 52.5 | 8 days | Closed |
10.69%
|
*Return(%) represent the percentage change between the entry price and exit price of the recommendation.
Data Powered by EOD Historical Data (“EODHD”).
Southwest Airlines Co. operates as a passenger airline company that provide scheduled air transportation services in the United States and near-international markets. As of December 31, 2022, the company operated a total fleet of 770 Boeing 737 aircrafts; and served 121 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. It also provides inflight entertainment portal and connectivity services on Wi-Fi enabled aircrafts; and Rapid Rewards loyalty program that enables program members to earn points for dollars spent on Southwest base fares. In addition, the company offers a suite of digital platforms to support customers' travel needs, including websites and apps; and SWABIZ, an online booking tool. Further, it provides ancillary services, such as Southwest's EarlyBird Check-In, upgraded boarding, and transportation of pets and unaccompanied minors. The company was incorporated in 1967 and is headquartered in Dallas, Texas.
Increase in Earnings Per Share: Q1FY26 EPS of USD 0.45 vs Q1FY25 adjusted loss per share of USD 0.13
Growth in Operating Cash Flow: Q1FY26 operating cash flow of USD 1.4 Bn vs Q1FY25 operating cash flow of approximately USD 0.85 Bn
Reduction in Aircraft Seating Capacity: Q1FY26 removal of 6 seats on the 737-700 fleet creating a 1.2 percentage-point unit-cost headwind vs Q1FY25
Increase in Fuel Expense: Q1FY26 additional fuel expense of approximately USD 164 Mn due to higher fuel prices vs Q1FY25
Southwest Airlines faces risk from sustained fuel price inflation and geopolitical uncertainty, which could pressure margins and require fare increases that may eventually weaken customer demand and revenue growth
| Entry Price | Support* | Target 1** | Target 2** |
|---|---|---|---|
| 47.43 | 43.0 | 50.0 | 52.5 |
Data Source: REFINITIV, Analysis: StockNextt
*Support can be considered as an indicative stop-loss, and if prices move below that level on closing basis individuals may evaluate exiting the position depending on their risk appetite, previous holdings, and other factors considered. The support and resistance levels may need to be re-evaluated within 4-6 weeks’ time frame depending on the stock price movements from the date of recommendation on the stock.
**Target prices may vary by ±0.5% depending on market volatility.
Business Model Transformation Driving Margin Expansion: Southwest Airlines’ strategic transformation has begun delivering tangible financial benefits, with all previously announced commercial, operational, and efficiency initiatives contributing to performance. The company reported a significant turnaround in profitability, supported by strong customer adoption of its enhanced product offerings and a notable improvement in operating margins despite elevated fuel costs.
Strong Revenue Momentum and Customer Adoption: The company achieved record first-quarter passenger revenue, operating revenue, and unit revenue, reflecting robust demand across business and leisure travel segments. Assigned seating, extra-legroom products, and ancillary offerings have been well received, with customer upgrades increasing substantially and helping drive double-digit unit revenue growth.
Corporate Travel and Loyalty Program Strength: Southwest is successfully attracting higher-yield travelers through its enhanced product portfolio. Managed corporate revenue reached record levels, while Rapid Rewards enrollment and tier-status growth demonstrated stronger customer engagement. These trends indicate improving customer quality and greater monetization opportunities across the network.
Operational Excellence and Cost Discipline: The airline maintained industry-leading operational reliability while implementing significant product changes. Cost management remained effective, with non-fuel unit cost growth below guidance despite seating reconfigurations. Operational efficiency initiatives and disciplined execution continue to support earnings growth and margin expansion.
Balance Sheet Strength and Strategic Flexibility: Southwest ended the quarter with substantial liquidity and an investment-grade balance sheet, providing resilience during industry volatility. Strong operating cash flow generation, disciplined capital allocation, and network optimization initiatives position the company to pursue further profitability improvements while maintaining financial flexibility.
Considering recent key business, financial updates, current trading levels, and key business risks, a ‘Buy’ recommendation has been given to Southwest Airlines Co. (NYSE: LUV) at the closing market price of USD 47.43, as on 16 June,2026
Data Powered by EOD Historical Data (“EODHD”).
Sector: Industrials Industry: Airlines
| Company | Change (USD) | Price (USD) | Trailing PE (x) | Forward PE (x) | Price Sales TTM (x) | Price to Book Value (x) | Enterprise Value to Revenue (x) | Enterprise Value to EBITDA (x) |
|---|---|---|---|---|---|---|---|---|
| LUV Southwest Airlines Company |
-0.05 0.10% | 48.29 | 36.42 | 10.89 | 0.68 | 1.57 | 0.58 | 6.34 |
| DAL Delta Air Lines Inc |
-0.175 0.21% | 84.36 | 10.39 | 12.61 | 0.71 | 2.30 | 0.95 | 9.84 |
| RYAAY Ryanair Holdings PLC ADR |
1.10 1.88% | 60.02 | 13.54 | 12.12 | 2.42 | 3.76 | 1.88 | 7.44 |
| BABWF International Consolidated Airlines Group S.A. |
- -% | 6.17 | 6.38 | 6.23 | 0.71 | 2.64 | 0.81 | 3.36 |
| RYAOF Ryanair Holdings PLC |
- -% | 29.57 | 8.35 | 7.81 | 1.82 | 2.20 | 1.80 | 6.53 |
Data Powered by EOD Historical Data (“EODHD”).
Markets are trading in a highly volatile zone currently due to certain macro-economic issues and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing.
Related Risks: This report may be looked at from high-risk perspective and recommendations are provided are for a short duration. Recommendations provided in this report are solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc.
Note 1: Past performance is not a reliable indicator of future performance.
Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels as on June 17, 2026. The reference data in this report has been partly sourced from REFINITIV.
Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned has been achieved and is subject to the factors discussed above.
Note 4: StockNextt reports are prepared based on the stock prices captured either from REFINITIV or Trading View. Typically, REFINITIV or Trading View may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.
Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.
Target: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Target 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Target 2 may act as the crucial resistance level for the stock.
Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.
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