SOUTHWEST AIRLINES's gross profit margin for the second quarter of its fiscal year 2015 has increased when compared to the same period a year ago. Sales and net income have grown, and although the growth in revenues has outpaced the average competitor within the industry, the net income growth has not. SOUTHWEST AIRLINES has weak liquidity. Currently, the Quick Ratio is 0.52 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 remained virtually unchanged only decreasing by 4.76% 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||Q2 FY15||Q2 FY14|
|Net Sales ($mil)||5111.0||5012.0|
|Net Income ($mil)||608.0||465.0|
|Balance Sheet||Q2 FY15||Q2 FY14|
|Cash & Equiv. ($mil)||3132.0||3994.0|
|Total Assets ($mil)||21075.0||20891.0|
|Total Debt ($mil)||2687.0||2758.0|
|Profitability||Q2 FY15||Q2 FY14|
|Gross Profit Margin||37.19||31.46|
|Return on Assets||7.49||5.2|
|Return on Equity||22.07||14.47|
|Debt||Q2 FY15||Q2 FY14|
|Share Data||Q2 FY15||Q2 FY14|
|Shares outstanding (mil)||668.3||685.14|
|Div / share||0.08||0.06|
|Book value / share||10.71||10.97|
|Institutional Own %||n/a||n/a|
|Avg Daily Volume||9555973.0||7039994.0|
BUY. This stock's P/E ratio indicates a discount compared to an average of 16.37 for the Airlines industry and a discount compared to the S&P 500 average of 21.18. Conducting a second comparison, its price-to-book ratio of 3.41 indicates a premium versus the S&P 500 average of 2.82 and a significant discount versus the industry average of 5.13. The current price-to-sales ratio is well below the S&P 500 average, but above the industry average. Upon assessment of these and other key valuation criteria, SOUTHWEST AIRLINES proves to trade at a discount to investment alternatives within the industry.
|LUV 15.72||Peers 16.37||LUV 9.55||Peers 8.04|
Average. An average P/E ratio can signify an industry neutral price for a stock and an average growth expectation.
LUV is trading at a valuation on par with its peers.
Premium. 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 premium to its peers.
|LUV 10.73||Peers 10.29||LUV 0.16||Peers 0.29|
Average. An average price-to-projected earnings ratio can signify an industry neutral stock price and average future growth expectations.
LUV is trading at a valuation on par with 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 significant discount to its peers.
|LUV 3.41||Peers 5.13||LUV 48.71||Peers 78.43|
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 significant discount to its peers.
Lower. Elevated earnings growth rates can lead to capital appreciation and justify higher price-to-earnings ratios.
However, LUV is expected to significantly trail its peers on the basis of its earnings growth rate.
|LUV 1.29||Peers 1.27||LUV 4.41||Peers 8.34|
Average. 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 valuation on par with 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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