Southwest Airlines Co

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LUV : NYSE : Services
$61.92 up 0.4 | 0.65%
Today's Range: 61.315 - 62.19
Avg. Daily Volume: 4597300.0
06/23/17 - 4:00 PM ET

Financial Analysis

SOUTHWEST AIRLINES's gross profit margin for the first quarter of its fiscal year 2017 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 0.55 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 9.44% 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 Q1 FY17 Q1 FY16
Net Sales ($mil)4883.04826.0
EBITDA ($mil)981.01234.0
EBIT ($mil)663.0944.0
Net Income ($mil)351.0511.0

Balance Sheet Q1 FY17 Q1 FY16
Cash & Equiv. ($mil)3482.03582.0
Total Assets ($mil)23763.022241.0
Total Debt ($mil)3066.03308.0
Equity ($mil)8204.07496.0

Profitability Q1 FY17 Q1 FY16
Gross Profit Margin33.1437.55
EBITDA Margin20.0925.56
Operating Margin13.5819.56
Sales Turnover0.860.9
Return on Assets8.7610.06
Return on Equity25.429.86
Debt Q1 FY17 Q1 FY16
Current Ratio0.620.55
Interest Expense29.030.0
Interest Coverage22.8631.47

Share Data Q1 FY17 Q1 FY16
Shares outstanding (mil)604.66638.69
Div / share0.10.08
Book value / share13.5711.74
Institutional Own % n/a n/a
Avg Daily Volume4606070.05588277.0


BUY. This stock's P/E ratio indicates a discount compared to an average of 21.53 for the Airlines industry and a discount compared to the S&P 500 average of 25.73. For additional comparison, its price-to-book ratio of 4.43 indicates a premium versus the S&P 500 average of 3.08 and a premium versus the industry average of 3.98. The current price-to-sales ratio is 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 18.16 Peers 21.53   LUV 8.42 Peers 7.24

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 12.79 Peers 15.61   LUV 2.15 Peers 2.45

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 discount to its peers.

1 2 3 4 5
premium   discount
  Earnings Growth
1 2 3 4 5
lower   higher
LUV 4.43 Peers 3.98   LUV -2.36 Peers -14.91

Premium. A higher price-to-book ratio makes a stock less attractive to investors seeking stocks with lower market values per dollar of equity on the balance sheet.

LUV is trading at a premium 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.

1 2 3 4 5
premium   discount
  Sales Growth
1 2 3 4 5
premium   discount
LUV 1.77 Peers 1.47   LUV 2.10 Peers 0.19

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.


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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