Southwest Airlines Company
Southwest Airlines (NYSE: LUV) holds the title of being the most significant domestic airline in the United States in terms of the number of passengers who begin their journeys with the airline. Southwest manages a fleet of more than 700 Boeing 737 aircraft exclusively, and even though it has extended its services to include longer routes and business travel, the airline's primary focus remains on short-haul leisure flights facilitated by a point-to-point network. Southwest adheres to a low-cost carrier business model.
Recent Financial and Business Updates:
- Second Quarter Income Statement Review:
- Reported a net profit of USD 683 million, equivalent to USD 1.08 per diluted share.
- When excluding special items, the net income amounted to USD 693 million, or USD 1.09 per diluted share.
- The company achieved record-breaking quarterly operating revenues of USD 7.0 billion.
- Its liquidity position stood at USD 13.2 billion, significantly surpassing the outstanding debt of USD 8.0 billion.
- Reported operating income of USD795 million for the quarter.
- Net income was USD 683 million in the quarter.
- The basic net income per share was USD 1.15, while diluted net income per share amounted to USD1.08 for the quarter.
- Balance Sheet Review:
- Cash and cash equivalents amounted to USD 9.15 billion as of June 30, 2023.
- Total current assets were reported to be USD 14.661 billion as of June 30, 2023.
- Total current liabilities amounted to USD 11.72 billion as of June 30, 2023.
Technical Observation (on the daily chart)
The stock reached its 52-week low of USD 25.94 on Monday, October 9, 2023. The Relative Strength Index (RSI) over a 14-day period stands at 35.18, recovering from the oversold zone. The stock price is heading towards its support level at USD 26.50– USD 25.80. On daily price chart, after a downtrend a dragonfly doji candle spotted on the daily price chart, and today a confirmation candle in forming on daily chart which indicates a potential up move in the stock in the short-term.
As per the above-mentioned price action, recent key business and financial updates, momentum in the stock over the last month, and technical indicators analysis, a ‘Buy’ rating has been given to Southwest Airlines (NYSE: LUV) at its price of USD 26.95 as of October 10, 2023, at 7:00 am PDT.
Individuals can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest taking into consideration the risk-reward scenario.
Markets are trading in a highly volatile zone currently due to certain macro-economic issues and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing.
Related Risk: This report may be looked at from a high-risk perspective and a recommendation is provided for a short duration. This report is solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc.
How to Read the Charts?
The yellow colour line reflects the 21-period simple moving average (SMA) while the blue line indicates the 50- period simple moving average (SMA). SMA helps to identify existing price trends. If the prices are trading above the 21-period and 50-period moving average, then it shows prices are currently trading in a bullish trend.
The orange colour line in the chart’s lower segment reflects the Relative Strength Index (14-Period) which indicates price momentum and signals momentum in trend. A reading of 70 or above suggests overbought status while a reading of 30 or below suggests an oversold status.
The red and green colour bars in the chart’s lower segment show the volume of the stock. The volume is the number of shares that changed hands during a given day. Stocks with high volumes are more liquid than stocks with lesser volume as liquidity in stocks helps with easier and faster execution of the order.
The Orange colour lines are the trend lines drawn by connecting two or more price points and used for trend identification purposes. The trend line also acts as a line of support and resistance.
Technical Indicators Defined: -
Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.
Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock.
Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.
The reference date for all price data, currency, technical indicators, support, and resistance levels is October 10, 2023. The reference data in this report has been partly sourced from REFINITIV.
Abbreviations
CMP: Current Market Price
SMA: Simple Moving Average
RSI: Relative Strength Index
USD: United States dollar
Note: Trading decisions require a thorough analysis by the individual. Technical reports in general chart out metrics that may be assessed by individuals before any stock evaluation. The above are illustrative analytical factors used for evaluating stocks; other parameters can be looked at along with additional risks per se. Past performance is neither an indicator nor a guarantee of future performance.
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