Surging Earnings Estimates Signal Upside for Southwest (LUV) Stock

Core Viewpoint - Southwest Airlines (LUV) shows potential as a strong investment opportunity due to a significant revision in earnings estimates, indicating an improving earnings outlook [1] Earnings Estimate Revisions - The trend of rising estimate revisions reflects growing analyst optimism regarding the airline's earnings prospects, which is expected to positively influence its stock price [2] - The Zacks Rank system, which ranges from 1 (Strong Buy) to 5 (Strong Sell), has demonstrated a strong track record, with Zacks 1 Ranked stocks averaging an annual return of +25% since 2008 [3] - Analysts have reached a consensus on upward revisions for Southwest Airlines' earnings estimates, leading to a notable improvement in consensus estimates for both the next quarter and the full year [3] Current-Quarter Estimate - For the current quarter, Southwest Airlines is projected to earn $0.55 per share, reflecting a -1.8% change from the previous year [5] - Over the past 30 days, the Zacks Consensus Estimate for the company has increased by 8.68%, with one estimate moving higher and two going lower [5] Current-Year Estimate - For the full year, the expected earnings per share is $0.93, indicating a year-over-year change of -3.1% [6] - The consensus estimate has seen an increase of 18.22% over the past month, despite two negative revisions [7] Zacks Rank - The favorable estimate revisions have led to Southwest Airlines achieving a Zacks Rank 2 (Buy), indicating strong potential for investment [8] - Research indicates that stocks with Zacks Rank 1 (Strong Buy) and 2 (Buy) tend to significantly outperform the S&P 500 [8] Investment Outlook - Strong estimate revisions have resulted in a 5.8% increase in Southwest Airlines' stock over the past four weeks, suggesting further upside potential [9] - The company may be a worthwhile addition to investment portfolios at this time [9]