Southwest Airlines Co (LUV): Today's Featured Services Laggard

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

Southwest Airlines ( LUV) pushed the Services sector lower today making it today's featured Services laggard. The sector as a whole closed the day up 0.4%. By the end of trading, Southwest Airlines fell 9 cents (-1%) to $8.89 on light volume. Throughout the day, 4.8 million shares of Southwest Airlines exchanged hands as compared to its average daily volume of 9.4 million shares. The stock ranged in price between $8.81-$8.99 after having opened the day at $8.97 as compared to the previous trading day's close of $8.98. Other companies within the Services sector that declined today were: Frontline ( FRO), down 13.6%, TAL Education Group ( XRS), down 13.1%, Amrep Corporation ( AXR), down 10.5%, and Westinghouse Solar ( WEST), down 8.9%.

Southwest Airlines Co. engages in the operation of a passenger airline that provides scheduled air transportation in the United States. Southwest Airlines has a market cap of $6.74 billion and is part of the transportation industry. The company has a P/E ratio of 20.6, above the average transportation industry P/E ratio of 20.2 and above the S&P 500 P/E ratio of 17.7. Shares are up 4.9% year to date as of the close of trading on Tuesday. Currently there are seven analysts that rate Southwest Airlines a buy, one analyst rates it a sell, and five rate it a hold.

TheStreet Ratings rates Southwest Airlines as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in net income, largely solid financial position with reasonable debt levels by most measures, increase in stock price during the past year and growth in earnings per share. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

On the positive front, China Auto Logistics ( CALI), up 27.4%, Genetic Technologies ( GENE), up 26%, LodgeNet Interactive Corporation ( LNET), up 21.6%, and QKL Stores ( QKLS), up 19.7%, were all gainers within the services sector with Lowe's Companies ( LOW) being today's featured services sector leader.

For investors not wanting singular stock exposure, ETFs may be of interest. Investors who are bullish on the services sector could consider iShares Dow Jones US Cons Services ( IYC) while those bearish on the services sector could consider ProShares Ultra Short Consumer Sers ( SCC).

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