Southwest Airlines Receives Mixed Ratings from Growth Model

A report assessing Southwest Airlines Co. highlights a mixed performance based on the Growth Investor model. Despite strong revenue metrics, weaknesses in earnings growth persist, which may impact investor sentiment and stock price.

Date: 26-12-2024

AI Rating: 5

The report evaluates Southwest Airlines Co (LUV) using the Growth Investor model, identifying it as a large-cap growth stock within the Airline industry. Notably, the overall rating stands at 54%, indicating a lack of strong investor interest, as scores above 80% are typically desirable.

The stock meets several criteria positively, including:

P/E Ratio: PASS
Revenue Growth in Relation to EPS Growth: PASS
Sales Growth Rate: PASS
Current Quarter Earnings: PASS
Quarterly Earnings One Year Ago: PASS
EPS Growth for Current Quarter Must Be Greater Than Prior 3 Quarters: PASS
Total Debt/Equity Ratio: PASS
Insider Transactions: PASS

However, the report highlights several concerning metrics:

Positive Earnings Growth Rate for Current Quarter: FAIL
Earnings Growth Rate for the Past Several Quarters: FAIL
EPS Growth for Current Quarter Must Be Greater Than Historical Growth Rate: FAIL
Earnings Persistence: FAIL
Long-Term EPS Growth: FAIL

The company’s inability to demonstrate positive earnings growth in the current quarter, along with a lack of persistence in earnings growth and failures in multiple EPS metrics, might lead to bearish sentiment among investors. The mixed performance could drive volatility in stock price, as it may reflect uncertainty regarding future profitability.

Stocks: LUV