Southwest Airlines Co.

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LUV : NYSE : Transportation
$58.27 up 0.09 | 0.15%
Today's Range: 58.205 - 58.88
Avg. Daily Volume: 4937000.0
02/16/18 - 4:00 PM ET

Financial Analysis


SOUTHWEST AIRLINES's gross profit margin for the fourth quarter of its fiscal year 2017 has decreased 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 0.57 which shows a lack of ability to cover short-term cash needs. The company's liquidity has increased from the same period last year.

During the same period, stockholders' equity ("net worth") has increased by 23.56% 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 FY17 Q4 FY16
Net Sales ($mil)5274.05075.0
EBITDA ($mil)1122.01167.0
EBIT ($mil)843.0849.0
Net Income ($mil)1888.0522.0


Balance Sheet Q4 FY17 Q4 FY16
Cash & Equiv. ($mil)3273.03305.0
Total Assets ($mil)25110.023286.0
Total Debt ($mil)3668.03387.0
Equity ($mil)10430.08441.0


Profitability Q4 FY17 Q4 FY16
Gross Profit Margin33.9235.92
EBITDA Margin21.2722.99
Operating Margin15.9816.73
Sales Turnover0.840.88
Return on Assets13.899.63
Return on Equity33.4426.58
Debt Q4 FY17 Q4 FY16
Current Ratio0.70.66
Debt/Capital0.260.29
Interest Expense30.029.0
Interest Coverage28.129.28


Share Data Q4 FY17 Q4 FY16
Shares outstanding (mil)588.55615.16
Div / share0.130.1
EPS3.180.84
Book value / share17.7213.72
Institutional Own % n/a n/a
Avg Daily Volume5061128.05378212.0

Valuation


BUY. This stock's P/E ratio indicates a discount compared to an average of 15.27 for the Airlines industry and a significant discount compared to the S&P 500 average of 25.51. To use another comparison, its price-to-book ratio of 3.28 indicates valuation on par with the S&P 500 average of 3.26 and a discount versus the industry average of 3.58. 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.


Price/Earnings
1 2 3 4 5
premium   discount
  Price/Cash Flow
1 2 3 4 5
premium   discount
LUV 10.00 Peers 15.27   LUV 8.72 Peers 9.66

Discount. A lower P/E ratio than its peers can signify a less expensive stock or lower growth expectations.

LUV is trading at a significant discount to its peers.

 

Average. 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 valuation on par 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 10.45 Peers 14.41   LUV NM Peers 0.61

Discount. A lower price-to-projected earnings ratio than its peers can signify a less expensive stock or lower future growth expectations.

LUV is trading at a discount to its peers.

 

Neutral. 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's negative PEG ratio makes this valuation measure meaningless.

 
Price/Book
1 2 3 4 5
premium   discount
  Earnings Growth
1 2 3 4 5
lower   higher
LUV 3.28 Peers 3.58   LUV 64.87 Peers 24.93

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 1.62 Peers 1.40   LUV 3.65 Peers 7.22

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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