SOUTHWEST AIRLINES's gross profit margin for the third quarter of its fiscal year 2014 has increased when compared to the same period a year ago. The company has grown its sales and net income during the past quarter when compared with the same quarter a year ago, and although its growth in net income has outpaced the industry average, its revenue growth has not. SOUTHWEST AIRLINES has weak liquidity. Currently, the Quick Ratio is 0.62 which shows a lack of ability to cover short-term cash needs. The liquidity decreased from the same period a year ago, despite already having weak liquidity to begin with. This would indicate deteriorating cash flow.
During the same period, stockholders' equity ("net worth") has increased by 5.93% from the same quarter last year. Overall, the key liquidity measurements indicate that the company is in a position in which financial difficulties could develop in the future.
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|Income Statement||Q3 FY14||Q3 FY13|
|Net Sales ($mil)||4799.0||4544.0|
|Net Income ($mil)||329.0||259.0|
|Balance Sheet||Q3 FY14||Q3 FY13|
|Cash & Equiv. ($mil)||3560.0||3328.0|
|Total Assets ($mil)||20539.0||19364.0|
|Total Debt ($mil)||2732.0||2875.0|
|Profitability||Q3 FY14||Q3 FY13|
|Gross Profit Margin||30.03||25.77|
|Return on Assets||5.63||3.2|
|Return on Equity||15.58||8.84|
|Debt||Q3 FY14||Q3 FY13|
|Share Data||Q3 FY14||Q3 FY13|
|Shares outstanding (mil)||678.74||696.72|
|Div / share||0.06||0.04|
|Book value / share||10.95||10.07|
|Institutional Own %||n/a||n/a|
|Avg Daily Volume||9979629.0||5967284.0|
BUY. SOUTHWEST AIRLINES's P/E ratio indicates a premium compared to an average of 16.94 for the Airlines industry and a premium compared to the S&P 500 average of 19.99. To use another comparison, its price-to-book ratio of 3.71 indicates a premium versus the S&P 500 average of 2.76 and a discount versus the industry average of 4.46. The current price-to-sales ratio is below the S&P 500 average, but above the industry average. The valuation analysis reveals that, SOUTHWEST AIRLINES seems to be trading at a premium to investment alternatives within the industry.
|LUV 24.32||Peers 16.94||LUV 9.29||Peers 33.92|
Premium. A higher P/E ratio than its peers can signify a more expensive stock or higher growth expectations.
LUV is trading at a significant premium to its peers.
Discount. The P/CF ratio, a stock’s price divided by the company's cash flow from operations, is useful for comparing companies with different capital requirements or financing structures.
LUV is trading at a significant discount to its peers.
|LUV 15.04||Peers 18.46||LUV 0.28||Peers 0.37|
Premium. A higher price-to-projected earnings ratio than its peers can signify a more expensive stock or higher future growth expectations.
LUV is trading at a premium to its peers.
Discount. The PEG ratio is the stock’s P/E divided by the consensus estimate of long-term earnings growth. Faster growth can justify higher price multiples.
LUV trades at a discount to its peers.
|LUV 3.71||Peers 4.46||LUV 91.95||Peers 13.69|
Discount. A lower price-to-book ratio makes a stock more attractive to investors seeking stocks with lower market values per dollar of equity on the balance sheet.
LUV is trading at a discount to its peers.
Higher. Elevated earnings growth rates can lead to capital appreciation and justify higher price-to-earnings ratios.
LUV is expected to have an earnings growth rate that significantly exceeds its peers.
|LUV 1.50||Peers 1.22||LUV 5.50||Peers 17.58|
Premium. In the absence of P/E and P/B multiples, the price-to-sales ratio can display the value investors are placing on each dollar of sales.
LUV is trading at a premium to its industry on this measurement.
Lower. A sales growth rate that trails the industry implies that a company is losing market share.
LUV significantly trails its peers on the basis of sales growth
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