2. Suncor Energy Suncor Energy (SU 1.00%) has been one of Singer's biggest holdings since 2022, when Elliott pushed the company to add new board members, overhaul its management team, and undergo a strategic review. Elliott now owns 52.7 million shares of the Canadian oil and gas stock, worth $2 billion. 3. Southwest Airlines Paul Singer, the founder and head of Elliott Investment Management, is one of the world's most successful and influential activist investors working today. With a net worth of around $ ...

The Zacks Style Scores, developed alongside the Zacks Rank, are complementary indicators that rate stocks based on three widely-followed investing methodologies; they also help investors pick stocks with the best chances of beating the market over the next 30 days. Each stock is assigned a rating of A, B, C, D, or F based on their value, growth, and momentum characteristics. Just like in school, an A is better than a B, a B is better than a C, and so on -- that means the better the score, the better chance ...

Core Insights - Southwest Airlines was previously regarded as the best-run and most consistently profitable airline globally, but its performance has declined in the post-COVID era due to high labor costs and challenges in generating premium and international revenue [1] Group 1 - The airline's historical reputation for operational excellence and profitability has been compromised in recent years [1] - Key factors contributing to the decline include increased labor expenses and a lack of premium service offerings [1] - The inability to tap into international markets has further hindered revenue growth for the airline [1]

Company Overview - Southwest Airlines (LUV) is currently ranked 2 (Buy) in the Zacks Rank, indicating a favorable outlook for the stock [3] - The stock has returned approximately 3.6% year-to-date, outperforming the average loss of about 1% in the Transportation sector [4] Industry Performance - Southwest Airlines is part of the Transportation - Airline industry, which consists of 27 companies and is ranked 43 in the Zacks Industry Rank [6] - The Transportation - Airline industry has gained about 8.3% year-to-date, indicating that LUV is slightly underperforming its industry [6] Comparative Analysis - Grupo Aeroportuario del Centro Norte (OMAB) is another strong performer in the Transportation sector, with a year-to-date return of 17.9% and a Zacks Rank of 2 (Buy) [5] - The Transportation - Services industry, which includes OMAB, has seen a decline of 5.6% year-to-date, contrasting with the performance of the Transportation - Airline industry [7]

Core Viewpoint - Southwest Airlines Co. (LUV) has announced strategic growth plans and financial targets, alongside a share buyback program, while facing weaker demand in Q1 2025 [1][2] Financial Performance - LUV's Q1 2025 capacity is expected to decline by 2% year-over-year, with previous guidance indicating a decline of 2-3% [3] - Revenue per available seat mile (RASM) is anticipated to increase by 2-4% year-over-year, down from a prior forecast of 5-7% due to reduced bookings and demand [4] - Economic fuel cost per gallon is now expected to be between $2.35 and $2.45, lower than the previous estimate of $2.50 to $2.60, which should positively impact the bottom line [5] Strategic Growth Plans - LUV is focusing on revenue management actions, including network optimization and marketing evolution, with initiatives such as assigned seating and a co-brand agreement with Chase [10] - The airline has updated its bag fee policy, maintaining two free checked bags for certain members while introducing fees for others [11] Liquidity and Shareholder Returns - LUV ended Q4 2024 with cash and cash equivalents of $7.50 billion, significantly higher than its debt level of $1.63 billion, indicating strong liquidity [12] - The company has completed a $1 billion share repurchase and plans to accelerate its remaining $1.5 billion buyback by July 2025 [15] Market Performance - LUV shares have gained 11% over the past six months, outperforming both the Zacks Airline industry and the S&P 500 [16] - The stock is trading at a discount compared to the industry, with a forward 12-month price-to-sales ratio below its five-year median [18] Cost Pressures - Operating expenses rose by 5% in 2024, with salaries and benefits increasing by 9.8%, and LUV expects a 6% increase in CASM (excluding fuel) for Q1 2025 [20][22]

Core Viewpoint - Southwest Airlines is positioned to potentially triple its stock value, attracting investor interest despite the general stigma surrounding the airline industry [1][2]. Company Overview - Southwest Airlines (LUV) is currently trading at $32.14, with a 52-week range of $23.58 to $36.12 and a dividend yield of 2.24% [2]. - The airline is known for its strong profit margins and effective fuel cost management, giving it a competitive edge [2][4]. Business Model Changes - The company is adjusting its business model by introducing new routes and flight schedules while eliminating its previous policy of two free checked bags, which may create new revenue streams [3][4]. Market Position - Southwest Airlines holds a comparable domestic market share to Delta Air Lines and American Airlines, with a significant number of flights per year [7]. - The airline's ability to hedge fuel costs gives it an advantage over competitors like Delta and United Airlines, which have broader international reach but less flexibility [4][6]. Financial Forecasts - Wall Street analysts forecast earnings per share (EPS) for Southwest Airlines to reach $3.27 by 2027, nearly tripling the 2025 forecast of $1.67 [8]. - The current price-to-earnings (P/E) ratio for Southwest Airlines is 44.1x, which, if maintained, could lead to a stock price of over $144 per share based on the EPS forecast [9][10]. Insider Confidence - Recent stock purchases by two Southwest Airlines directors indicate confidence in the company's future performance ahead of the first quarter financial results [11]. Financial Performance - The latest quarterly results show record operating revenue of $6.9 billion, with operating cash flows increasing to $476 million, a 12% rise from the previous year [12][13].

Core Insights - Southwest Airlines is ending its long-standing policy of allowing customers to check bags for free, effective May 28, 2025, which has led to customer dissatisfaction [1][4][20] Company Strategy - The decision to charge for checked bags is part of Southwest's strategy to increase profitability amid pressure from investors and competition from larger airlines like Delta and United [4][9][12] - The airline has historically maintained a streak of profitability and has been resistant to charging for bags, but recent financial pressures have prompted a reevaluation of this stance [4][15][24] Customer Reactions - Customers express disappointment and consider switching to other airlines, indicating that the free bag policy was a significant factor in their loyalty to Southwest [2][5][20] - The airline's social media engagement has seen a notable increase in responses following the announcement, reflecting customer outrage [17][19] Market Dynamics - The airline industry is witnessing a trend where companies are pulling back on free perks, with many benefits now reserved for loyalty program members or higher-tier ticket holders [6][9] - Competitors like Delta and United are also adapting their services, offering perks tied to loyalty programs, which may attract customers away from Southwest [7][20] Financial Implications - Following the announcement of the bag policy change, Southwest's shares rose nearly 9%, while shares of competitors fell, indicating investor optimism about the potential for increased revenue [11][12] - Southwest anticipates that the changes could add hundreds of millions of dollars to its bottom line, despite the risk of losing market share [11][15] Operational Considerations - The airline is preparing for an increase in carry-on luggage as customers may opt to avoid checked bag fees, which could impact operational efficiency [22][23] - Southwest is implementing measures to manage the expected rise in carry-on bags, including retrofitting aircraft with larger overhead bins [23][24][26]

Core Insights - Zacks Premium offers various tools to help investors make informed decisions and invest confidently in the stock market [1] - The Zacks Style Scores provide a unique rating system for stocks based on value, growth, and momentum, enhancing the Zacks Rank [2] Zacks Style Scores - Stocks are rated from A to F based on their value, growth, and momentum qualities, with A being the highest score indicating a better chance of outperforming the market [3] - The Value Score focuses on identifying undervalued stocks using financial ratios like P/E, PEG, and Price/Cash Flow [4] - The Growth Score emphasizes a company's financial strength and future outlook, analyzing projected and historical earnings, sales, and cash flow [5] - The Momentum Score helps investors capitalize on price trends by assessing recent price changes and earnings estimate revisions [6] - The VGM Score combines all three Style Scores, providing a comprehensive indicator for selecting stocks with attractive value, growth potential, and momentum [6] Zacks Rank - The Zacks Rank is a proprietary model that utilizes earnings estimate revisions to assist investors in building successful portfolios [7] - Stocks rated 1 (Strong Buy) have historically produced an average annual return of +25.41% since 1988, significantly outperforming the S&P 500 [8] - There are over 800 top-rated stocks available, making it essential for investors to utilize Style Scores to narrow down their choices [9] Investment Strategy - For optimal returns, investors should focus on stocks with a Zacks Rank of 1 or 2 and Style Scores of A or B [10] - Stocks with a 3 (Hold) rank should also have Style Scores of A or B to maximize upside potential [10] - The direction of earnings estimate revisions is crucial when selecting stocks, as a declining forecast can negatively impact share prices [11] Company Spotlight: Southwest Airlines (LUV) - Southwest Airlines, based in Dallas, TX, is a passenger airline operating in the U.S. and ten near-international markets, incorporated in 1967 [12] - LUV currently holds a 3 (Hold) rating on the Zacks Rank, with a VGM Score of A [12] - The stock has a Momentum Style Score of B, with shares increasing by 3.6% over the past four weeks [13] - Analysts have revised LUV's earnings estimate upwards, with the Zacks Consensus Estimate rising by $0.05 to $1.63 per share, and the company has an average earnings surprise of 58.6% [13]

Core Insights - Southwest Airlines will end its long-standing policy of free checked bags starting in May, allowing only select customers to check two bags for free [1][2][3] - United Airlines CEO Scott Kirby believes this change will significantly impact Southwest and make other airlines more competitive, particularly affecting low-end customers [4][6] - Delta Airlines President Glen Hauenstein noted that customers who previously chose Southwest for its free checked bag policy are now potential customers for other airlines [9][11] Summary by Sections Southwest Airlines Policy Change - Southwest Airlines announced the termination of its free checked bag policy, which previously allowed all travelers to check two bags for free [1][2] - Starting in May, only Southwest Rapid Rewards A-List Preferred Members, Business Select passengers, and select customers will retain the option for free checked bags [1][2] Industry Reactions - United Airlines CEO Scott Kirby stated that the policy change would be beneficial for competitors and could lead to a shift of low-end customers to other airlines [4][6] - Kirby emphasized that the change reflects a more financially driven approach by Southwest, marking a significant shift in its business model [5][6] - Delta's Glen Hauenstein expressed that the loss of the free checked bag policy opens opportunities for other airlines to attract Southwest's former customers [9][11] Future Developments - Southwest Airlines plans to introduce assigned seating and premium seating options, with implementation expected to begin in the first quarter of 2026 [10][11] - The airline's new Basic fare for lowest priced tickets will also take effect for tickets purchased on or after May 28 [10]

Core Viewpoint - Southwest Airlines Co. (LUV) shares rose 8.34% to $30.53 on March 11, 2025, driven by strategic growth plans and a share buyback announcement, despite weaker demand forecasts for Q1 2025 [1] Group 1: Q1 Outlook - LUV's first-quarter capacity (available seat miles) is expected to decline by 2% year-over-year, an improvement from the previous guidance of a 2-3% decline [2] - Revenue per available seat mile (RASM) is anticipated to increase by 2-4% year-over-year, down from a prior forecast of 5-7%, due to softer bookings and macroeconomic uncertainties [3] - Economic fuel cost per gallon is now expected to be between $2.35 and $2.45, a decrease from the previous range of $2.50 to $2.60, which should positively impact the bottom line [4] - Consolidated unit cost (CASM), excluding fuel, is expected to rise by 6% year-over-year, a reduction from the prior estimate of 7-9% growth, attributed to increased capacity and lower-than-expected expenses [5] - Interest expenses are projected to remain at $45 million for the first quarter [6] Group 2: Strategic Growth Plans - LUV has completed $1 billion in share repurchases from a $2.5 billion program and plans to finish the remaining $1.5 billion by July 2025 [7] - The company is focusing on revenue management actions, including network optimization and marketing evolution, with initiatives like assigned seating and partnerships with Chase and Icelandair [8] - An updated bag fee policy will take effect on May 28, 2025, maintaining free checked bags for certain members while introducing fees for others [9] - LUV aims to double its 2027 cost reduction target to exceed $1 billion and will discontinue its fuel hedging program [10] - The CEO expressed optimism about meeting customer needs and returning to expected profitability levels [11] Group 3: Industry Context - Other airlines, including Delta Air Lines, American Airlines, and JetBlue Airways, have also revised their Q1 2025 guidance, citing economic uncertainties and reduced travel demand [12] - Delta has lowered its adjusted EPS guidance to 30-50 cents from 70 cents-$1, with total revenue growth expectations also reduced [13][14] - American Airlines now anticipates a loss per share of 60-80 cents, down from a prior expected loss of 20-40 cents, with total revenues expected to be flat year-over-year [16] - JetBlue expects a capacity decline of 4-5% and mixed RASM forecasts, reflecting broader industry challenges [19][20]