Traders Purchase High Volume of Southwest Airlines Call Options (NYSE:LUV)

Southwest Airlines Co. (NYSE:LUV) was the target of unusually large options trading on Wednesday. Traders purchased 87,173 call options on the stock. This represents an increase of approximately 281% compared to the typical daily volume of 22,898 call options.

Southwest Airlines Stock Down 0.4%

Shares of NYSE LUV traded down $0.19 during trading on Wednesday, reaching $41.38. 2,012,233 shares of the stock were exchanged, compared to its average volume of 10,920,686. The company has a market capitalization of $21.40 billion, a price-to-earnings ratio of 63.65, a price-to-earnings-growth ratio of 0.87 and a beta of 1.17. The business’s 50-day moving average price is $34.84 and its 200 day moving average price is $33.38. The company has a quick ratio of 0.42, a current ratio of 0.49 and a debt-to-equity ratio of 0.52. Southwest Airlines has a twelve month low of $23.82 and a twelve month high of $43.54.

Southwest Airlines (NYSE:LUV) last released its quarterly earnings results on Tuesday, February 6th. The airline reported ($0.38) earnings per share (EPS) for the quarter. The firm had revenue of $6.17 billion for the quarter. Southwest Airlines had a return on equity of 6.39% and a net margin of 1.38%. As a group, equities analysts forecast that Southwest Airlines will post 1.55 EPS for the current fiscal year.

Southwest Airlines Announces Dividend

The firm also recently declared a quarterly dividend, which will be paid on Friday, January 16th. Investors of record on Friday, December 26th will be issued a $0.18 dividend. The ex-dividend date of this dividend is Friday, December 26th. This represents a $0.72 dividend on an annualized basis and a yield of 1.7%. Southwest Airlines’s dividend payout ratio is currently 110.77%.

Analyst Upgrades and Downgrades

LUV has been the topic of several recent analyst reports. Raymond James Financial increased their target price on Southwest Airlines from $42.00 to $49.00 and gave the stock an “outperform” rating in a research report on Friday, December 19th. UBS Group restated a “hold” rating and issued a $43.00 target price (up from $33.00) on shares of Southwest Airlines in a report on Friday, December 12th. Wells Fargo & Company started coverage on shares of Southwest Airlines in a research report on Thursday, December 18th. They set an “equal weight” rating and a $45.00 price target for the company. TD Cowen increased their price target on shares of Southwest Airlines from $31.00 to $42.00 and gave the stock a “hold” rating in a research note on Friday, December 12th. Finally, BMO Capital Markets began coverage on shares of Southwest Airlines in a research note on Tuesday, December 9th. They set a “market perform” rating and a $43.00 price objective for the company. Five analysts have rated the stock with a Buy rating, twelve have assigned a Hold rating and four have given a Sell rating to the company’s stock. Based on data from MarketBeat.com, the company presently has a consensus rating of “Hold” and an average target price of $39.44.

Hedge Funds Weigh In On Southwest Airlines

Institutional investors have recently made changes to their positions in the business. Arrowstreet Capital Limited Partnership boosted its stake in shares of Southwest Airlines by 2,403.8% during the 2nd quarter. Arrowstreet Capital Limited Partnership now owns 10,120,368 shares of the airline’s stock valued at $328,305,000 after buying an additional 9,716,160 shares during the last quarter. Ameriprise Financial Inc. raised its holdings in Southwest Airlines by 43.7% in the third quarter. Ameriprise Financial Inc. now owns 12,335,167 shares of the airline’s stock valued at $393,615,000 after acquiring an additional 3,753,183 shares in the last quarter. CIBC Bancorp USA Inc. bought a new position in Southwest Airlines during the 3rd quarter valued at $62,340,000. Alyeska Investment Group L.P. acquired a new stake in shares of Southwest Airlines in the 1st quarter valued at about $56,244,000. Finally, JPMorgan Chase & Co. raised its stake in shares of Southwest Airlines by 13.6% in the 3rd quarter. JPMorgan Chase & Co. now owns 12,218,086 shares of the airline’s stock valued at $389,879,000 after purchasing an additional 1,459,235 shares in the last quarter. 80.82% of the stock is owned by institutional investors and hedge funds.

About Southwest Airlines

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.