Southwest Airlines (NYSE:LUV) Posts Quarterly Earnings Results, Beats Estimates By $0.03 EPS

Southwest Airlines (NYSE:LUV) released its quarterly earnings data on Wednesday. The airline reported $0.58 EPS for the quarter, beating the consensus estimate of $0.55 by $0.03, FiscalAI reports. The company had revenue of $7.44 billion for the quarter, compared to analysts’ expectations of $7.51 billion. Southwest Airlines had a return on equity of 6.39% and a net margin of 1.38%.

Southwest Airlines Trading Down 1.0%

NYSE:LUV traded down $0.40 during midday trading on Wednesday, hitting $40.94. 10,275,526 shares of the company traded hands, compared to its average volume of 8,620,788. The firm has a market capitalization of $21.17 billion, a P/E ratio of 62.98, a P/E/G ratio of 0.38 and a beta of 1.16. The firm’s fifty day moving average is $39.89 and its 200-day moving average is $35.01. Southwest Airlines has a 12-month low of $23.82 and a 12-month high of $45.02. The company has a current ratio of 0.49, a quick ratio of 0.42 and a debt-to-equity ratio of 0.52.

Southwest Airlines Announces Dividend

The business also recently announced a quarterly dividend, which was paid on Friday, January 16th. Stockholders of record on Friday, December 26th were given a dividend of $0.18 per share. The ex-dividend date of this dividend was Friday, December 26th. This represents a $0.72 annualized dividend and a dividend yield of 1.8%. Southwest Airlines’s payout ratio is currently 110.77%.

Key Stories Impacting Southwest Airlines

Here are the key news stories impacting Southwest Airlines this week:

• Positive Sentiment: Management issued strong 2026 guidance — at least $4.00 adjusted EPS, citing the 2025 business transformation and momentum into 2026; this is being viewed as a major potential earnings upside driver. SOUTHWEST AIRLINES REPORTS FOURTH QUARTER AND FULL YEAR 2025 RESULTS; EXPECTS STRONG 2026 FINANCIAL PERFORMANCE FROM BUSINESS TRANSFORMATION
• Positive Sentiment: Q4 EPS of $0.58 topped consensus ($0.55), indicating some margin gains and cost control that support management’s turnaround narrative. Quarterly results press release
• Positive Sentiment: Analyst support: Jefferies raised its price target to $45, reflecting improved sentiment around the transformation and profit outlook. Jefferies Raises Southwest Airlines Price Target to $45.00
• Positive Sentiment: Media coverage highlights that new revenue levers — assigned seating, bag fees and premium cabins — are already being cited by management as drivers of a big profit rebound in 2026. Southwest Airlines forecasts surge in 2026 profits after new seat, bag fees take hold
• Neutral Sentiment: Southwest officially ended its 54‑year open‑seating policy; coverage focuses on traveler reaction and the brand shift — strategically important but execution and customer retention impact are still uncertain. Southwest ends open seating after 54 years
• Neutral Sentiment: Research and previews (Zacks, Yahoo) discussed key metrics and what to watch in Q4; useful context for investors but not immediate catalysts. Unlocking Q4 Potential of Southwest (LUV)
• Negative Sentiment: Revenue missed estimates ($7.44B vs. $7.51B consensus), signaling growth lags even as margins improve — a reason for investor caution on near‑term top‑line momentum. Quarterly results press release
• Negative Sentiment: Unusually large put buying activity was reported (~40,382 puts, ~65% above average), suggesting some investors are positioning for downside or hedging into the news cycle.

Hedge Funds Weigh In On Southwest Airlines

Institutional investors have recently modified their holdings of the stock. MUFG Securities EMEA plc purchased a new stake in shares of Southwest Airlines in the 2nd quarter worth approximately $55,000. Ossiam bought a new position in shares of Southwest Airlines in the 2nd quarter worth $61,000. Brown Brothers Harriman & Co. lifted its stake in shares of Southwest Airlines by 159.0% during the 3rd quarter. Brown Brothers Harriman & Co. now owns 2,370 shares of the airline’s stock worth $76,000 after purchasing an additional 1,455 shares during the last quarter. Federated Hermes Inc. bought a new position in Southwest Airlines in the second quarter worth about $80,000. Finally, Danske Bank A S purchased a new stake in shares of Southwest Airlines during the third quarter valued at about $108,000. 80.82% of the stock is owned by hedge funds and other institutional investors.

Analysts Set New Price Targets

LUV has been the topic of several research reports. UBS Group raised their target price on Southwest Airlines from $43.00 to $45.00 and gave the stock a “neutral” rating in a research report on Tuesday, January 6th. Evercore ISI upped their price objective on Southwest Airlines from $35.00 to $40.00 in a research note on Friday, January 9th. Bank of America upped their price target on Southwest Airlines from $28.00 to $37.00 and gave the stock an “underperform” rating in a research report on Tuesday, January 6th. Jefferies Financial Group boosted their price objective on Southwest Airlines from $42.00 to $45.00 and gave the company a “hold” rating in a research note on Monday. Finally, Wall Street Zen raised shares of Southwest Airlines from a “sell” rating to a “hold” rating in a report on Saturday, October 25th. Six research analysts have rated the stock with a Buy rating, eleven have issued a Hold rating and four have given a Sell rating to the company’s stock. According to data from MarketBeat, Southwest Airlines currently has an average rating of “Hold” and a consensus target price of $42.37.

Southwest Airlines Company Profile

Southwest Airlines Co is a U.S.-based low-cost carrier that operates a point-to-point domestic and near-international airline network. Headquartered in Dallas, Texas, the company primarily flies Boeing 737 aircraft and offers no-frills, single-class service designed to keep fares competitive. Southwest’s operating model emphasizes high aircraft utilization, quick turnaround times and an open seating policy, allowing customers to board and select seats on a first-come, first-served basis.

Founded in 1967 by Herb Kelleher and Rollin King as Air Southwest Company, Southwest began commercial service in 1971, initially connecting Dallas, Houston and San Antonio.