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
Debt/Capital0.270.3
Interest Expense27.032.0
Interest Coverage46.5940.53


Share Data Q2 FY17 Q2 FY16
Shares outstanding (mil)598.57620.23
Div / share0.130.1
EPS1.231.28
Book value / share14.2512.61
Institutional Own % n/a n/a
Avg Daily Volume4792214.05235247.0

Valuation


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.


Price/Earnings
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.

 
Price/Projected
Earnings
1 2 3 4 5
premium   discount
  Price to
Earnings/Growth
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.

 
Price/Book
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.

 
Price/Sales
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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