Southwest Airlines Co

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LUV : NYSE : Services
$57.91 up 0.05 | 0.09%
Today's Range: 57.14 - 58.0
Avg. Daily Volume: 5474900.0
02/22/17 - 4:00 PM ET

Financial Analysis


SOUTHWEST AIRLINES's gross profit margin for the fourth quarter of its fiscal year 2016 has decreased when compared to the same period a year ago. Even though sales increased, the net income has decreased. SOUTHWEST AIRLINES has weak liquidity. Currently, the Quick Ratio is 0.56 which shows a lack of ability to cover short-term cash needs. The company's liquidity has increased from the same period last year, indicating improving cash flow.

During the same period, stockholders' equity ("net worth") has increased by 14.71% 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 Q4 FY16 Q4 FY15
Net Sales ($mil)5075.04977.0
EBITDA ($mil)1167.01436.0
EBIT ($mil)849.01172.0
Net Income ($mil)522.0536.0


Balance Sheet Q4 FY16 Q4 FY15
Cash & Equiv. ($mil)3305.03051.0
Total Assets ($mil)23286.021312.0
Total Debt ($mil)3387.03178.0
Equity ($mil)8441.07358.0


Profitability Q4 FY16 Q4 FY15
Gross Profit Margin35.9241.11
EBITDA Margin22.9928.85
Operating Margin16.7323.55
Sales Turnover0.880.92
Return on Assets9.6310.23
Return on Equity26.5829.64
Debt Q4 FY16 Q4 FY15
Current Ratio0.660.54
Debt/Capital0.290.3
Interest Expense29.029.0
Interest Coverage29.2840.41


Share Data Q4 FY16 Q4 FY15
Shares outstanding (mil)615.16647.6
Div / share0.10.08
EPS0.840.82
Book value / share13.7211.36
Institutional Own % n/a n/a
Avg Daily Volume5478961.07764761.0

Valuation


BUY. The current P/E ratio indicates a premium compared to an average of 12.36 for the Airlines industry and a significant discount compared to the S&P 500 average of 26.35. For additional comparison, its price-to-book ratio of 4.11 indicates a premium versus the S&P 500 average of 2.94 and a premium versus the industry average of 3.88. The current price-to-sales ratio is 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 premium to investment alternatives within the industry.


Price/Earnings
1 2 3 4 5
premium   discount
  Price/Cash Flow
1 2 3 4 5
premium   discount
LUV 15.96 Peers 12.36   LUV 8.07 Peers 7.28

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.

 

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.

 
Price/Projected
Earnings
1 2 3 4 5
premium   discount
  Price to
Earnings/Growth
1 2 3 4 5
premium   discount
LUV 12.12 Peers 14.70   LUV 1.69 Peers 1.38

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.

 

Premium. 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 premium to its peers.

 
Price/Book
1 2 3 4 5
premium   discount
  Earnings Growth
1 2 3 4 5
lower   higher
LUV 4.11 Peers 3.88   LUV 8.28 Peers -15.10

Average. 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 valuation on par with 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.

 
Price/Sales
1 2 3 4 5
premium   discount
  Sales Growth
1 2 3 4 5
premium   discount
LUV 1.70 Peers 1.29   LUV 3.95 Peers 1.95

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 significant premium to its industry.

 

Higher. A sales growth rate that exceeds the industry implies that a company is gaining market share.

LUV has a sales growth rate that significantly exceeds its peers.

 

 

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