Southwest Airlines Co (LUV): Today's Featured Transportation 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 Transportation industry lower today making it today's featured Transportation laggard. The industry as a whole closed the day down 0.1%. By the end of trading, Southwest Airlines fell 9 cents (-1%) to $8.74 on light volume. Throughout the day, 4.8 million shares of Southwest Airlines exchanged hands as compared to its average daily volume of 7.1 million shares. The stock ranged in price between $8.69-$8.90 after having opened the day at $8.84 as compared to the previous trading day's close of $8.83. Other companies within the Transportation industry that declined today were: DS Torm ( TRMD), down 11.3%, Sino-Global Shipping America ( SINO), down 8.7%, Overseas Shipholding Group ( OSG), down 6.8%, and USA Truck ( USAK), down 4.9%.
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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 $6.5 billion and is part of the services sector. The company has a P/E ratio of 25, above the average transportation industry P/E ratio of 13.5 and above the S&P 500 P/E ratio of 17.7. Shares are up 2.2% year to date as of the close of trading on Thursday. Currently there are six analysts that rate Southwest Airlines a buy, one analyst rates it a sell, and six 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 compelling growth in net income, reasonable valuation levels, good cash flow from operations, largely solid financial position with reasonable debt levels by most measures and impressive record of earnings per share growth. We feel these strengths outweigh the fact that the company shows low profit margins.

On the positive front, FreeSeas ( FREE), up 15.3%, Newlead Holdings ( NEWL), up 11.1%, Vitran Corporation ( VTNC), up 8.3%, and Pacer International ( PACR), up 7.8%, were all gainers within the transportation industry with Kansas City Southern ( KSU) being today's featured transportation industry leader.

For investors not wanting singular stock exposure, ETFs may be of interest. Investors who are bullish on the transportation industry could consider iShares Dow Jones Transportation ( IYT) while those bearish on the transportation industry could consider ProShares UltraShort Industrials ( SIJ).

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