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
Debt/Capital0.270.31
Interest Expense29.030.0
Interest Coverage22.8631.47


Share Data Q1 FY17 Q1 FY16
Shares outstanding (mil)604.66638.69
Div / share0.10.08
EPS0.570.79
Book value / share13.5711.74
Institutional Own % n/a n/a
Avg Daily Volume4606070.05588277.0

Valuation


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.


Price/Earnings
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.

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

 
Price/Book
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.

 
Price/Sales
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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