Pros and Cons to Buying Southwest Airlines Stock

Southwest Airlines Co. (ticker: LUV) enjoys a loyal customer base. But the question is whether investors should feel the same kind of passion for LUV stock.Launched on June 18, 1971, Southwest has packed a ton of air travel experiences for its loyal consumer base for more than 47 years. The airline is widely viewed as one of the most consumer-focused companies in the U.S. Marketing research company J.D. Power ranks Southwest as the top-rated low-fare airline in its 2018 North America Airline Satisfaction Study. Southwest also ranks No. 5 by U.S. News & World Report for its airline rewards program. But Southwest stock has encountered headwinds in 2018, with slower revenue growth and higher company costs. Looking forward, Southwest hopes to leave some of its heavy turbulence behind as 2018 draws to a close. But reasons for optimism appear limited. Southwest’s share price stands at $53, down from nearly $67 per share at the beginning of 2018. The stock is trading at the lower end of its 52-week trading range ($47.10 to $66.98.)The stock’s dividend is modest at 1.2 percent and the consensus one-year target share price is $68 per share. The third quarter painted a better financial picture for Southwest with revenues clocking in at $5.58 billion, a 5.1 percent year-over-year improvement over the $5.3 billion posted in the third quarter of 2017. Revenue per available seat mile, a key financial metric for airlines, was up 1.2 for the quarter, against a 1.6 percent decline in the first six months of 2018.