The company released its May traffic results on Tuesday. The airline flew 10.2 billion revenue passenger miles, an 8.5% increase from May 2014. But according to company estimates, passenger revenue per available seat mile, a key industry metric, fell 6% year over year in May. Southwest expects second-quarter passenger revenue available per seat mile to drop between 4% and 5% from the second quarter of 2014.
Southwest CEO Gary Kelly said that the company has "taken steps this week to begin pulling down our second half 2015 available seat miles to manage our 2015 capacity growth, year-over-year, to approximately seven percent. With weaker than expected economic growth, we continue to evaluate our 2016 capacity plans with a current intent to cap our available seat miles growth to approximately 6%, year over year."
At $34.93 per share, the stock trades at roughly 14 times greater than its pre-share earnings last year, according to data compiled by Bloomberg. The analysts at Stifel maintain a buy rating, while Cowen & Company and Wolfe Research hold an outperform rating. Raymond James maintains a market perform rating. Bloomberg data show 60% of analysts hold a buy rating, 25% maintain a hold rating and 15% have a sell rating.
Trading volume was particularly heavy on Tuesday with almost 31 million shares trading hands, compared to its daily average of 7.7 million shares. Shares of Southwest Airlines have fallen almost 18% since the start of the year.
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, solid stock price performance, largely solid financial position with reasonable debt levels by most measures and notable return on equity. We feel its strengths outweigh the fact that the company shows low profit margins."
You can view the full analysis from the report here: LUV Ratings Report