SOUTHWEST AIRLINES CO (LUV)
US8447411088 - Common Stock
We assign a fundamental rating of 3 out of 10 to LUV. LUV was compared to 23 industry peers in the Passenger Airlines industry. LUV scores quite bad on profitability, while its financial health is fine. Not spectacular, but in line with the averages. While showing a medium growth rate, LUV is valued expensive at the moment.
1. Profitability
1.1 Basic Checks
LUV had positive earnings in the past year.
LUV had a positive operating cash flow in the past year.
LUV had positive earnings in 4 of the past 5 years.
LUV had a positive operating cash flow in 4 of the past 5 years.
1.2 Ratios
LUV has a Return On Assets (-0.14%) which is in line with its industry peers.
The Return On Equity of LUV (-0.47%) is better than 60.87% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | -0.14% | ||
| ROE | -0.47% | ||
| ROIC | N/A |
ROA(3y)1.83%
ROA(5y)1.1%
ROE(3y)6.28%
ROE(5y)1.52%
ROIC(3y)N/A
ROIC(5y)N/A
1.3 Margins
LUV's Profit Margin has declined in the last couple of years.
In the last couple of years the Operating Margin of LUV has declined.
LUV has a better Gross Margin (70.11%) than 91.30% of its industry peers.
In the last couple of years the Gross Margin of LUV has remained more or less at the same level.
LUV does not have Profit Margin and Operating Margin available, so we won't be analyzing them here.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | N/A | ||
| PM (TTM) | N/A | ||
| GM | 70.11% |
OM growth 3YN/A
OM growth 5Y-38.55%
PM growth 3YN/A
PM growth 5Y-30.79%
GM growth 3Y1.72%
GM growth 5Y-0.81%
2. Health
2.1 Basic Checks
LUV does not have a ROIC to compare to the WACC, probably because it is not profitable.
Compared to 1 year ago, LUV has more shares outstanding
The number of shares outstanding for LUV has been increased compared to 5 years ago.
The debt/assets ratio for LUV has been reduced compared to a year ago.
2.2 Solvency
An Altman-Z score of 1.85 indicates that LUV is not a great score, but indicates only limited risk for bankruptcy at the moment.
LUV's Altman-Z score of 1.85 is amongst the best of the industry. LUV outperforms 82.61% of its industry peers.
A Debt/Equity ratio of 0.49 indicates that LUV is not too dependend on debt financing.
Looking at the Debt to Equity ratio, with a value of 0.49, LUV belongs to the top of the industry, outperforming 86.96% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.49 | ||
| Debt/FCF | N/A | ||
| Altman-Z | 1.85 |
ROIC/WACCN/A
WACC7.58%
2.3 Liquidity
LUV has a Current Ratio of 0.88. This is a bad value and indicates that LUV is not financially healthy enough and could expect problems in meeting its short term obligations.
Looking at the Current ratio, with a value of 0.88, LUV is in the better half of the industry, outperforming 78.26% of the companies in the same industry.
A Quick Ratio of 0.83 indicates that LUV may have some problems paying its short term obligations.
With a decent Quick ratio value of 0.83, LUV is doing good in the industry, outperforming 78.26% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.88 | ||
| Quick Ratio | 0.83 |
3. Growth
3.1 Past
LUV shows a slight negative growth in Earnings Per Share. In the last year, the EPS has decreased by -9.76%.
Measured over the past years, LUV shows a very negative growth in Earnings Per Share. The EPS has been decreasing by -18.10% on average per year.
LUV shows a small growth in Revenue. In the last year, the Revenue has grown by 7.61%.
LUV shows a small growth in Revenue. Measured over the last years, the Revenue has been growing by 3.50% yearly.
EPS 1Y (TTM)-9.76%
EPS 3YN/A
EPS 5Y-18.1%
EPS Q2Q%-60.53%
Revenue 1Y (TTM)7.61%
Revenue growth 3Y42.34%
Revenue growth 5Y3.5%
Sales Q2Q%5.29%
3.2 Future
The Earnings Per Share is expected to grow by 24.23% on average over the next years. This is a very strong growth
The Revenue is expected to grow by 3.64% on average over the next years.
EPS Next Y-50.52%
EPS Next 2Y2.33%
EPS Next 3Y15.08%
EPS Next 5Y24.23%
Revenue Next Year5.6%
Revenue Next 2Y5.47%
Revenue Next 3Y5.36%
Revenue Next 5Y3.64%
3.3 Evolution
The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.
The Revenue growth rate is stable: in the next years the growth will be about the same than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
The Price/Earnings ratio is 44.97, which means the current valuation is very expensive for LUV.
Compared to the rest of the industry, the Price/Earnings ratio of LUV is on the same level as its industry peers.
The average S&P500 Price/Earnings ratio is at 27.20. LUV is valued rather expensively when compared to this.
A Price/Forward Earnings ratio of 20.24 indicates a rather expensive valuation of LUV.
The rest of the industry has a similar Price/Forward Earnings ratio as LUV.
When comparing the Price/Forward Earnings ratio of LUV to the average of the S&P500 Index (23.73), we can say LUV is valued inline with the index average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 44.97 | ||
| Fwd PE | 20.24 |
4.2 Price Multiples
LUV's Enterprise Value to EBITDA ratio is in line with the industry average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | N/A | ||
| EV/EBITDA | 12.55 |
4.3 Compensation for Growth
A more expensive valuation may be justified as LUV's earnings are expected to grow with 15.08% in the coming years.
PEG (NY)N/A
PEG (5Y)N/A
EPS Next 2Y2.33%
EPS Next 3Y15.08%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 2.20%, LUV has a reasonable but not impressive dividend return.
LUV's Dividend Yield is rather good when compared to the industry average which is at 2.99. LUV pays more dividend than 86.96% of the companies in the same industry.
LUV's Dividend Yield is comparable with the S&P500 average which is at 2.36.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.2% |
5.2 History
The dividend of LUV has a limited annual growth rate of 4.34%.
LUV has been paying a dividend for at least 10 years, so it has a reliable track record.
Dividend Growth(5Y)4.34%
Div Incr Years0
Div Non Decr Years0
5.3 Sustainability
The earnings of LUV are negative and hence is the payout ratio. LUV will probably not be able to sustain this dividend level.
The dividend of LUV is growing, but earnings are growing more, so the dividend growth is sustainable.
DP-879.59%
EPS Next 2Y2.33%
EPS Next 3Y15.08%
SOUTHWEST AIRLINES CO
NYSE:LUV (12/20/2024, 8:23:09 PM)
After market: 33.29 +0.01 (+0.03%)33.28
+0.5 (+1.53%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupTransportation
GICS IndustryPassenger Airlines
Earnings (Last)
Earnings (Next)
Inst Owners99.68%
Inst Owner Change3.1%
Ins Owners0.74%
Ins Owner Change73.95%
Market Cap19.96B
Analysts54.48
Price Target29.94 (-10.04%)
Short Float %5.91%
Short Ratio4.98
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.2% |
Dividend Growth(5Y)4.34%
DP-879.59%
Div Incr Years0
Div Non Decr Years0
Ex-Date
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)2008.05%
Min EPS beat(2)13.47%
Max EPS beat(2)4002.62%
EPS beat(4)3
Avg EPS beat(4)1056.87%
Min EPS beat(4)-5.93%
Max EPS beat(4)4002.62%
EPS beat(8)3
Avg EPS beat(8)498.25%
EPS beat(12)6
Avg EPS beat(12)342.61%
EPS beat(16)9
Avg EPS beat(16)256.95%
Revenue beat(2)1
Avg Revenue beat(2)0.22%
Min Revenue beat(2)-0.55%
Max Revenue beat(2)1%
Revenue beat(4)2
Avg Revenue beat(4)-0.45%
Min Revenue beat(4)-2.41%
Max Revenue beat(4)1%
Revenue beat(8)2
Avg Revenue beat(8)-0.72%
Revenue beat(12)2
Avg Revenue beat(12)-0.66%
Revenue beat(16)4
Avg Revenue beat(16)-0.82%
PT rev (1m)2.31%
PT rev (3m)11.37%
EPS NQ rev (1m)0.07%
EPS NQ rev (3m)-19.7%
EPS NY rev (1m)3.79%
EPS NY rev (3m)264.26%
Revenue NQ rev (1m)-0.03%
Revenue NQ rev (3m)-3.36%
Revenue NY rev (1m)0.16%
Revenue NY rev (3m)1.85%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 44.97 | ||
| Fwd PE | 20.24 | ||
| P/S | 0.73 | ||
| P/FCF | N/A | ||
| P/OCF | 48.56 | ||
| P/B | 1.92 | ||
| P/tB | 2.18 | ||
| EV/EBITDA | 12.55 |
EPS(TTM)0.74
EY2.22%
EPS(NY)1.64
Fwd EY4.94%
FCF(TTM)-3.21
FCFYN/A
OCF(TTM)0.69
OCFY2.06%
SpS45.65
BVpS17.36
TBVpS15.24
PEG (NY)N/A
PEG (5Y)N/A
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | -0.14% | ||
| ROE | -0.47% | ||
| ROCE | N/A | ||
| ROIC | N/A | ||
| ROICexc | N/A | ||
| ROICexgc | N/A | ||
| OM | N/A | ||
| PM (TTM) | N/A | ||
| GM | 70.11% | ||
| FCFM | N/A |
ROA(3y)1.83%
ROA(5y)1.1%
ROE(3y)6.28%
ROE(5y)1.52%
ROIC(3y)N/A
ROIC(5y)N/A
ROICexc(3y)N/A
ROICexc(5y)N/A
ROICexgc(3y)N/A
ROICexgc(5y)N/A
ROCE(3y)N/A
ROCE(5y)N/A
ROICexcg growth 3YN/A
ROICexcg growth 5YN/A
ROICexc growth 3YN/A
ROICexc growth 5YN/A
OM growth 3YN/A
OM growth 5Y-38.55%
PM growth 3YN/A
PM growth 5Y-30.79%
GM growth 3Y1.72%
GM growth 5Y-0.81%
F-Score5
Asset Turnover0.79
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.49 | ||
| Debt/FCF | N/A | ||
| Debt/EBITDA | 3.6 | ||
| Cap/Depr | 140.42% | ||
| Cap/Sales | 8.54% | ||
| Interest Coverage | N/A | ||
| Cash Conversion | 29.13% | ||
| Profit Quality | N/A | ||
| Current Ratio | 0.88 | ||
| Quick Ratio | 0.83 | ||
| Altman-Z | 1.85 |
F-Score5
WACC7.58%
ROIC/WACCN/A
Cap/Depr(3y)188.57%
Cap/Depr(5y)138.2%
Cap/Sales(3y)11.14%
Cap/Sales(5y)8.74%
Profit Quality(3y)N/A
Profit Quality(5y)N/A
High Growth Momentum
Growth
EPS 1Y (TTM)-9.76%
EPS 3YN/A
EPS 5Y-18.1%
EPS Q2Q%-60.53%
EPS Next Y-50.52%
EPS Next 2Y2.33%
EPS Next 3Y15.08%
EPS Next 5Y24.23%
Revenue 1Y (TTM)7.61%
Revenue growth 3Y42.34%
Revenue growth 5Y3.5%
Sales Q2Q%5.29%
Revenue Next Year5.6%
Revenue Next 2Y5.47%
Revenue Next 3Y5.36%
Revenue Next 5Y3.64%
EBIT growth 1Y-207.63%
EBIT growth 3YN/A
EBIT growth 5Y-36.4%
EBIT Next Year157.37%
EBIT Next 3Y64.96%
EBIT Next 5Y49.09%
FCF growth 1Y-378.07%
FCF growth 3YN/A
FCF growth 5YN/A
OCF growth 1Y-88.11%
OCF growth 3YN/A
OCF growth 5Y-8.35%