Is Buying Stock Like Southwest Airlines Co Good Idea After Today’s Bearish Options Activity?

 Is Buying Stock Like Southwest Airlines Co Good Idea After Today's Bearish Options Activity?

In today’s session Southwest Airlines Co (LUV) recorded an unusually high (522) contracts volume of put trades. Someone, most probably a professional was a very active buyer of the December, 2016 put, expecting serious LUV decrease. With 522 contracts traded and 8924 open interest for the Dec, 16 contract, it seems this is a quite bearish bet. The option with symbol: LUV161216P00040000 closed last at: $2.35 or 11.3% down. About 640,236 shares traded hands. Southwest Airlines Co (NYSE:LUV) has declined 6.63% since March 2, 2016 and is downtrending. It has underperformed by 14.89% the S&P500.

Analysts await Southwest Airlines Co (NYSE:LUV) to report earnings on October, 27. They expect $0.90 earnings per share, down 4.26% or $0.04 from last year’s $0.94 per share. LUV’s profit will be $550.01M for 10.89 P/E if the $0.90 EPS becomes a reality. After $1.19 actual earnings per share reported by Southwest Airlines Co for the previous quarter, Wall Street now forecasts -24.37% negative EPS growth.

Southwest Airlines Co (NYSE:LUV) Ratings Coverage

Out of 10 analysts covering Southwest Airlines Co. (NYSE:LUV), 6 rate it a “Buy”, 0 “Sell”, while 4 “Hold”. This means 60% are positive. $64 is the highest target while $41 is the lowest. The $50.38 average target is 28.55% above today’s ($39.19) stock price. Southwest Airlines Co. has been the topic of 24 analyst reports since July 30, 2015 according to StockzIntelligence Inc. Imperial Capital initiated the shares of LUV in a report on Friday, September 9 with “Outperform” rating. As per Tuesday, March 29, the company rating was initiated by Stephens. JP Morgan upgraded Southwest Airlines Co (NYSE:LUV) rating on Thursday, July 30. JP Morgan has “Overweight” rating and $50 price target. Deutsche Bank maintained the shares of LUV in a report on Friday, October 23 with “Buy” rating. Barclays Capital upgraded the shares of LUV in a report on Friday, April 15 to “Equal-Weight” rating. The stock has “Outperform” rating given by Imperial Capital on Thursday, September 3. The firm earned “Buy” rating on Tuesday, July 26 by Evercore. The company was downgraded on Tuesday, August 18 by Vetr. On Friday, June 24 the stock rating was maintained by Cowen & Co with “Outperform”. Credit Suisse maintained it with “Outperform” rating and $53 target price in Tuesday, April 12 report.

According to Zacks Investment Research, “Southwest Airlines is a major domestic airline that provides primarily shorthaul, high-frequency, point-to-point, low-fare service. Southwest operates over Boeing 737 aircraft in numerous cities. Southwest has the lowest operating cost structure in the domestic airline industry and consistently offers the lowest and simplest fares. Southwest also has one of the best overall Customer Service records.”

Insitutional Activity: The institutional sentiment decreased to 0.89 in 2016 Q2. Its down 0.09, from 0.98 in 2016Q1. The ratio turned negative, as 75 funds sold all Southwest Airlines Co shares owned while 260 reduced positions. 66 funds bought stakes while 233 increased positions. They now own 471.95 million shares or 5.42% less from 499.00 million shares in 2016Q1.
Natl Bank Of Montreal Can has 6.28M shares for 0.28% of their US portfolio. Employees Retirement Association Of Colorado accumulated 0.02% or 51,937 shares. Kcm Invest Advisors Ltd Liability Com accumulated 0.02% or 7,726 shares. Monetta Services Inc has 1.11% invested in the company for 45,000 shares. First Republic Inv Management last reported 106,519 shares in the company. Herndon Cap Mngmt Ltd Liability Corporation has 59 shares for 0% of their US portfolio. Cypress has invested 0.41% of its portfolio in Southwest Airlines Co (NYSE:LUV). Stratos Wealth Partners Ltd holds 0.18% of its portfolio in Southwest Airlines Co (NYSE:LUV) for 63,398 shares. U S Glob, a Texas-based fund reported 166,016 shares. Marietta Investment Partners Ltd Llc last reported 0.14% of its portfolio in the stock. Rdl Fincl has 0.93% invested in the company for 32,174 shares. The Japan-based Sumitomo Mitsui Asset Management Limited has invested 0.02% in Southwest Airlines Co (NYSE:LUV). Goldman Sachs Group Inc last reported 0.03% of its portfolio in the stock. Parallax Volatility Advisers L P last reported 0.01% of its portfolio in the stock. Gsa Prtn Llp accumulated 0.05% or 24,499 shares.

Insider Transactions: Since April 25, 2016, the stock had 3 insider purchases, and 5 selling transactions for $70,593 net activity. Shaw Mark R sold $4,731 worth of Southwest Airlines Co (NYSE:LUV) on Tuesday, April 26. On Wednesday, August 3 the insider Van de Ven Michael G bought $150,247. 8,000 shares were sold by BIEGLER DAVID W, worth $375,552. MONTFORD JOHN T had sold 1,210 shares worth $52,404. KELLY GARY C also bought $1.00M worth of Southwest Airlines Co (NYSE:LUV) on Tuesday, August 2. Shares for $204,046 were bought by CUNNINGHAM WILLIAM H DR on Wednesday, August 3. On Thursday, May 26 Lamb Jeff sold $784,250 worth of the stock or 18,765 shares.

Southwest Airlines Co. operates Southwest Airlines. The company has a market cap of $23.95 billion. Southwest is a passenger airline that provides scheduled air transportation in the United States and near-international markets. It has a 10.37 P/E ratio. The Firm serves approximately 100 destinations in over 40 states, such as the District of Columbia, the Commonwealth of Puerto Rico, and approximately seven near-international countries, including Mexico, Jamaica, The Bahamas, Aruba, Dominican Republic, Costa Rica, and Belize.

LUV Company Profile

Southwest Airlines Co. (Southwest), incorporated on March 9, 1967, operates Southwest Airlines. Southwest is a passenger airline that provides scheduled air transportation in the United States and near-international markets. The Firm serves approximately 100 destinations in over 40 states, such as the District of Columbia, the Commonwealth of Puerto Rico, and approximately seven near-international countries, including Mexico, Jamaica, The Bahamas, Aruba, Dominican Republic, Costa Rica, and Belize. The Firm added its first three destinations in Central America (San Jose, Costa Rica, Belize City, Belize, and Liberia, Costa Rica) and also commenced Southwest service to a fourth destination in Mexico (Puerto Vallarta). Southwest operates a total of approximately 704 Boeing 737 aircraft. The Firm also added approximately 20 domestic nonstop destinations from Dallas Love Field. Southwest offers a total of 180 weekday departures to over 50 nonstop destinations from Dallas Love Field. In addition, the Company added over eight international nonstop destinations from a newly constructed five-gate international terminal at Houston’s William P. Hobby Airport.

More notable recent Southwest Airlines Co (NYSE:LUV) news were published by: Dallasnews.com which released: “Southwest Airlines pilot deal may be jeopardized by new Delta agreement” on October 03, 2016, also Investorplace.com with their article: “3 Airline Stocks That Beat Southwest Airlines Co (LUV)” published on September 29, 2016, Reuters.com published: “Southwest Airlines signs tentative agreement with flight attendants” on September 09, 2016. More interesting news about Southwest Airlines Co (NYSE:LUV) were released by: Prnewswire.com and their article: “Southwest Airlines Offers Domestic Fares Starting As Low As $49 One-Way And …” published on October 04, 2016 as well as Fool.com‘s news article titled: “Southwest Airlines: New Labor Contracts Will Drive Unit Cost Growth” with publication date: September 19, 2016.

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