Core Viewpoint - Southwest Airlines Co. has underperformed compared to the broader market and industry benchmarks, with a notable decline in stock value despite some positive earnings surprises. Company Overview - Southwest Airlines, based in Dallas, Texas, is valued at $15.7 billion and offers scheduled air transportation services in the U.S. and near-international markets, along with various in-flight and loyalty services [1]. Stock Performance - Over the past year, LUV's stock has declined by 3.7%, while the S&P 500 Index has increased by 17.7% [2]. - In 2025, LUV's stock fell by 9.9%, contrasting with a 16.3% rise in the S&P 500 on a year-to-date basis [2]. - Compared to the U.S. Global Jets ETF (JETS), which gained about 6.8% over the past year, LUV's performance has been weaker [3]. Recent Financial Results - On October 22, LUV reported Q3 results, with shares closing down more than 6% in the following trading session. The adjusted EPS was $0.11, exceeding Wall Street expectations of $0.01, while revenue was $6.95 billion, slightly missing forecasts of $6.97 billion [4]. Earnings Expectations - For the current fiscal year ending in December, analysts expect LUV's EPS to grow by 13.5% to $1.09 on a diluted basis. The company's earnings surprise history is mixed, beating estimates in three of the last four quarters [5]. Analyst Ratings - Among 21 analysts covering LUV, the consensus rating is "Hold," with four "Strong Buy," one "Moderate Buy," 11 "Holds," one "Moderate Sell," and four "Strong Sells" [5]. - UBS maintained a "Neutral" rating on LUV and lowered the price target to $33, indicating a potential upside of 8.9% from current levels. The mean price target of $33.12 suggests a 9.3% premium, while the highest target of $46 indicates a potential upside of 51.8% [6].

Investors have gravitated to companies enacting forward stock splits A stock split is a tool public companies can lean on to cosmetically alter their share price and outstanding share count by the same factor. The "cosmetic" aspect of splits pertains to them not impacting a company's market cap or in any way affecting underlying operating performance. There are two types of stock splits, and investors treat them very differently. Reverse splits, which aim to increase a company's share price, are often frown ...