Southwest Airlines Co

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LUV : NYSE : Services
$53.17 | %
Today's Range: 53.12 - 54.009
Avg. Daily Volume: 4858400.0
08/18/17 - 4:00 PM ET

Financial Analysis

SOUTHWEST AIRLINES's gross profit margin for the second quarter of its fiscal year 2017 is essentially unchanged 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 0.53 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 9.06% 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 FY17 Q2 FY16
Net Sales ($mil)5744.05384.0
EBITDA ($mil)1577.01595.0
EBIT ($mil)1258.01297.0
Net Income ($mil)746.0822.0

Balance Sheet Q2 FY17 Q2 FY16
Cash & Equiv. ($mil)3152.03415.0
Total Assets ($mil)23921.022447.0
Total Debt ($mil)3095.03354.0
Equity ($mil)8530.07821.0

Profitability Q2 FY17 Q2 FY16
Gross Profit Margin39.1940.71
EBITDA Margin27.4529.62
Operating Margin21.924.09
Sales Turnover0.870.91
Return on Assets8.3910.92
Return on Equity23.5431.36
Debt Q2 FY17 Q2 FY16
Current Ratio0.610.57
Interest Expense27.032.0
Interest Coverage46.5940.53

Share Data Q2 FY17 Q2 FY16
Shares outstanding (mil)598.57620.23
Div / share0.130.1
Book value / share14.2512.61
Institutional Own % n/a n/a
Avg Daily Volume4792214.05235247.0


BUY. This stock's P/E ratio indicates a discount compared to an average of 21.86 for the Airlines industry and a discount compared to the S&P 500 average of 24.31. For additional comparison, its price-to-book ratio of 3.79 indicates a premium versus the S&P 500 average of 3.03 and a premium versus the industry average of 3.66. The current price-to-sales ratio is well below the S&P 500 average, but above the industry average.

1 2 3 4 5
premium   discount
  Price/Cash Flow
1 2 3 4 5
premium   discount
LUV 16.57 Peers 21.86   LUV 8.26 Peers 7.41

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

LUV is trading at a discount 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.

1 2 3 4 5
premium   discount
  Price to
1 2 3 4 5
premium   discount
LUV 11.47 Peers 12.79   LUV 2.22 Peers 1.33

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.


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 significant premium to its peers.

1 2 3 4 5
premium   discount
  Earnings Growth
1 2 3 4 5
lower   higher
LUV 3.79 Peers 3.66   LUV -13.53 Peers -14.69

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.


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.

1 2 3 4 5
premium   discount
  Sales Growth
1 2 3 4 5
premium   discount
LUV 1.55 Peers 1.41   LUV 2.50 Peers 2.72

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.


Average. Comparing a company's sales growth to its industry helps to determine if the company is adding or losing market share.

LUV is keeping pace with its peers on the basis of sales growth.



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