Southwest Airlines Stock Soars 5.53% with 4.50 Billion Shares Traded Ranking 208th in Daily Trading

On May 27, 2025, Southwest Airlines (LUV) saw a significant surge in its stock price, rising by 5.53%. The trading volume reached 4.50 billion, marking a 60.14% increase from the previous day, placing it at the 208th position in the day's trading rankings.

Southwest Airlines has introduced a new baggage fee structure, which has contributed to the recent rise in its stock price. The new policy includes a $35 charge for the first checked bag and $45 for the second. However, Business Select or Choice Extra ticket holders, as well as A-List and Rapid Rewards credit card holders, will continue to enjoy complimentary checked bags. This change aligns with the industry trend of boosting revenue through non-ticket charges and was initially announced in March, with specific fee amounts disclosed recently.

Southwest Airlines' market capitalization stands at $18.61 billion, with a Price-to-Earnings (PE) ratio of 38.42, indicating a relatively high valuation compared to historical norms. The company's Price-to-Book (PB) ratio is nearing a two-year high, suggesting an elevated valuation level. Despite financial challenges, Southwest maintains a high Piotroski F-Score of 8, demonstrating strong financial health. Insider buying activity, with 33,196 shares purchased over the past three months, suggests confidence among executives. The company's Altman Z-score of 1.93 indicates some financial stress but remains above the critical threshold of 1.8, minimizing bankruptcy risk concerns.

Jefferies analyst has upgraded the stock, citing an earnings boost from the new luggage fees. The new fees are similar to what other airlines charge for checked bags, and the recent stock price movement and insider transactions point towards a potentially optimistic outlook for Southwest Airlines. However, investors should note that while the introduction of new fees could improve profitability, the Return on Invested Capital (ROIC) remains below the company's weighted average cost of capital (WACC), suggesting potential inefficiencies in capital allocation.