David Crush, a director at Southwest Airlines (LUV), recently bought 5,000 shares. The buy increased his stake by 36%, and came to a total cost of $150,150.
He was joined by two other directors, who each bought about 3,250 shares, paying just under $100,000 each to do so. Going further back, there were some other insider buys from company directors into 2024, with one sizeable insider sale from an activist investment firm.
Overall, Southwest insiders own 0.4% of shares.
The low-frills airline is up 13% over the past year, slightly outperforming the overall stock market. Operationally, Southwest has struggled, as revenues grew by less than 2%, and overall earnings growth was negative.
Travel and tourism spending has been strong, but a pullback in government spending on travel could impact the airline sector’s operations over the next few months.
Rising shares amid lackluster performance has shares looking pricey at 42 times earnings, although shares do looks like a more reasonable value trading at 0.7 times their price-to-sales.
Action to take: Shares are starting to trend higher after declining in recent weeks. Shares could be on track to retest their prior 52-week high of just over $36, for a low double-digit return from here.
At current prices, Southwest also pays a 2.3% dividend.
For traders, a swing higher looks more likely in the coming weeks. The April $0.35 calls, last trading for about $0.38, could see high double-digit returns from a continued move higher.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.