Southwest Airlines Co
Find Ratings ReportsSOUTHWEST 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 ($mil) | 5744.0 | 5384.0 |
| EBITDA ($mil) | 1577.0 | 1595.0 |
| EBIT ($mil) | 1258.0 | 1297.0 |
| Net Income ($mil) | 746.0 | 822.0 |
| Balance Sheet | Q2 FY17 | Q2 FY16 |
|---|---|---|
| Cash & Equiv. ($mil) | 3152.0 | 3415.0 |
| Total Assets ($mil) | 23921.0 | 22447.0 |
| Total Debt ($mil) | 3095.0 | 3354.0 |
| Equity ($mil) | 8530.0 | 7821.0 |
| Profitability | Q2 FY17 | Q2 FY16 |
|---|---|---|
| Gross Profit Margin | 39.19 | 40.71 |
| EBITDA Margin | 27.45 | 29.62 |
| Operating Margin | 21.9 | 24.09 |
| Sales Turnover | 0.87 | 0.91 |
| Return on Assets | 8.39 | 10.92 |
| Return on Equity | 23.54 | 31.36 |
| Debt | Q2 FY17 | Q2 FY16 |
|---|---|---|
| Current Ratio | 0.61 | 0.57 |
| Debt/Capital | 0.27 | 0.3 |
| Interest Expense | 27.0 | 32.0 |
| Interest Coverage | 46.59 | 40.53 |
| Share Data | Q2 FY17 | Q2 FY16 |
|---|---|---|
| Shares outstanding (mil) | 598.57 | 620.23 |
| Div / share | 0.13 | 0.1 |
| EPS | 1.23 | 1.28 |
| Book value / share | 14.25 | 12.61 |
| Institutional Own % | n/a | n/a |
| Avg Daily Volume | 4792214.0 | 5235247.0 |
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.
| Price/Earnings |
|
Price/Cash Flow |
| |||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| LUV 16.57 | Peers 21.86 | LUV 8.26 | Peers 7.41 | |||||||||||||||||||||
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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. |
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| Price/Projected Earnings |
|
Price to Earnings/Growth |
|
|||||||||||||||||||||
| LUV 11.47 | Peers 12.79 | LUV 2.22 | Peers 1.33 | |||||||||||||||||||||
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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. |
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| Price/Book |
|
Earnings Growth |
|
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| LUV 3.79 | Peers 3.66 | LUV -13.53 | Peers -14.69 | |||||||||||||||||||||
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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. |
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. |
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| Price/Sales |
|
Sales Growth |
|
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| LUV 1.55 | Peers 1.41 | LUV 2.50 | Peers 2.72 | |||||||||||||||||||||
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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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