Southwest Airlines (LUV) Stock Down, Airline Stocks Pressured After Paris Attacks
NEW YORK (TheStreet) -- Southwest Airlines Co. (LUV) - Get Report shares are tumbling 1.94% to $45 on Monday as airline stocks were pushed lower after the Paris terrorist attacks on Friday.
The possibility that terrorists may strike again in other countries besides Europe instilled fear in travelers, MarketWatch reports.
"There will definitely be a negative psychological impact in the short term in tourism-related sectors. Airlines are particularly affected," said Zhang Qi, a Shanghai-based analyst with Haitong Securities, according to Bloomberg.
Additionally, airports like Aeroports de Paris have tightened security measures, adding an additional one hour to passengers' travel times, Bloomberg noted.
Based in Dallas, Southwest Airlines operates passenger airlines that provide scheduled air transportation services in the U.S. and near-international markets
Separately, TheStreet Ratings team rates SOUTHWEST AIRLINES as a Buy with a ratings score of A+. TheStreet Ratings Team has this to say about their recommendation:
We rate SOUTHWEST AIRLINES (LUV) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, impressive record of earnings per share growth, good cash flow from operations, expanding profit margins and solid stock price performance. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 5.8%. Since the same quarter one year prior, revenues slightly increased by 7.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
- SOUTHWEST AIRLINES reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, SOUTHWEST AIRLINES increased its bottom line by earning $1.65 versus $1.06 in the prior year. This year, the market expects an improvement in earnings ($3.53 versus $1.65).
- Net operating cash flow has significantly increased by 247.91% to $835.00 million when compared to the same quarter last year. In addition, SOUTHWEST AIRLINES has also vastly surpassed the industry average cash flow growth rate of 136.48%.
- 39.41% is the gross profit margin for SOUTHWEST AIRLINES which we consider to be strong. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, LUV's net profit margin of 11.34% significantly trails the industry average.
- Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.
- You can view the full analysis from the report here: LUV