Southwest Airlines Co.
Find Ratings Reports
-1.1 |
-2.0%
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 ($mil) | 5274.0 | 5075.0 |
| EBITDA ($mil) | 1122.0 | 1167.0 |
| EBIT ($mil) | 843.0 | 849.0 |
| Net Income ($mil) | 1888.0 | 522.0 |
| Balance Sheet | Q4 FY17 | Q4 FY16 |
|---|---|---|
| Cash & Equiv. ($mil) | 3273.0 | 3305.0 |
| Total Assets ($mil) | 25110.0 | 23286.0 |
| Total Debt ($mil) | 3668.0 | 3387.0 |
| Equity ($mil) | 10430.0 | 8441.0 |
| Profitability | Q4 FY17 | Q4 FY16 |
|---|---|---|
| Gross Profit Margin | 33.92 | 35.92 |
| EBITDA Margin | 21.27 | 22.99 |
| Operating Margin | 15.98 | 16.73 |
| Sales Turnover | 0.84 | 0.88 |
| Return on Assets | 13.89 | 9.63 |
| Return on Equity | 33.44 | 26.58 |
| Debt | Q4 FY17 | Q4 FY16 |
|---|---|---|
| Current Ratio | 0.7 | 0.66 |
| Debt/Capital | 0.26 | 0.29 |
| Interest Expense | 30.0 | 29.0 |
| Interest Coverage | 28.1 | 29.28 |
| Share Data | Q4 FY17 | Q4 FY16 |
|---|---|---|
| Shares outstanding (mil) | 588.55 | 615.16 |
| Div / share | 0.13 | 0.1 |
| EPS | 3.18 | 0.84 |
| Book value / share | 17.72 | 13.72 |
| Institutional Own % | n/a | n/a |
| Avg Daily Volume | 5203374.0 | 4766835.0 |
BUY. This stock's P/E ratio indicates a discount compared to an average of 16.80 for the Airlines industry and a significant discount compared to the S&P 500 average of 24.51. To use another comparison, its price-to-book ratio of 3.09 indicates valuation on par with the S&P 500 average of 3.18 and a discount versus the industry average of 3.31. 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 |
|
Price/Cash Flow |
| |||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| LUV 9.42 | Peers 16.80 | LUV 8.21 | Peers 7.33 | |||||||||||||||||||||
|
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. |
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. |
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| Price/Projected Earnings |
|
Price to Earnings/Growth |
|
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| LUV 9.87 | Peers 11.86 | LUV NM | Peers 0.49 | |||||||||||||||||||||
|
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. |
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. |
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| Price/Book |
|
Earnings Growth |
|
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| LUV 3.09 | Peers 3.31 | LUV 64.87 | Peers 23.30 | |||||||||||||||||||||
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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. |
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| Price/Sales |
|
Sales Growth |
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| LUV 1.52 | Peers 1.31 | LUV 3.65 | Peers 7.81 | |||||||||||||||||||||
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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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