SOUTHWEST AIRLINES CO (LUV) Stock Fundamental Analysis
NYSE:LUV - US8447411088 - Common Stock
32.77 USD
+1.7 (+5.47%)
32.77 USD
0 (0%)
Overall LUV gets a fundamental rating of 4 out of 10. We evaluated LUV against 22 industry peers in the Passenger Airlines industry. LUV has a medium profitability rating, but doesn't score so well on its financial health evaluation. LUV is quite expensive at the moment. It does show a decent growth rate.
1. Profitability
1.1 Basic Checks
LUV had positive earnings in the past year.
In the past year LUV had a positive cash flow from operations.
Of the past 5 years LUV 4 years were profitable.
LUV had a positive operating cash flow in 4 of the past 5 years.
1.2 Ratios
LUV has a better Return On Assets (1.37%) than 63.64% of its industry peers.
LUV has a Return On Equity of 4.90%. This is in the better half of the industry: LUV outperforms 63.64% of its industry peers.
With a Return On Invested Capital value of 1.35%, LUV perfoms like the industry average, outperforming 45.45% of the companies in the same industry.
The Average Return On Invested Capital over the past 3 years for LUV is significantly below the industry average of 9.61%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 1.37% | ||
| ROE | 4.9% | ||
| ROIC | 1.35% |
ROA(3y)1.39%
ROA(5y)-0.4%
ROE(3y)4.65%
ROE(5y)-2.26%
ROIC(3y)1.77%
ROIC(5y)N/A
1.3 Margins
LUV's Profit Margin of 1.43% is fine compared to the rest of the industry. LUV outperforms 63.64% of its industry peers.
LUV's Profit Margin has declined in the last couple of years.
With a Operating Margin value of 1.16%, LUV perfoms like the industry average, outperforming 50.00% of the companies in the same industry.
LUV's Operating Margin has declined in the last couple of years.
Looking at the Gross Margin, with a value of 73.31%, LUV belongs to the top of the industry, outperforming 100.00% of the companies in the same industry.
LUV's Gross Margin has been stable in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 1.16% | ||
| PM (TTM) | 1.43% | ||
| GM | 73.31% |
OM growth 3YN/A
OM growth 5Y-38.41%
PM growth 3Y-35.09%
PM growth 5Y-30.26%
GM growth 3Y0.9%
GM growth 5Y-0.77%
2. Health
2.1 Basic Checks
The Return on Invested Capital (ROIC) is below the Cost of Capital (WACC), so LUV is destroying value.
Compared to 1 year ago, LUV has less shares outstanding
The number of shares outstanding for LUV has been increased compared to 5 years ago.
Compared to 1 year ago, LUV has an improved debt to assets ratio.
2.2 Solvency
An Altman-Z score of 2.08 indicates that LUV is not a great score, but indicates only limited risk for bankruptcy at the moment.
With an excellent Altman-Z score value of 2.08, LUV belongs to the best of the industry, outperforming 81.82% of the companies in the same industry.
LUV has a Debt/Equity ratio of 0.51. This is a neutral value indicating LUV is somewhat dependend on debt financing.
The Debt to Equity ratio of LUV (0.51) is better than 81.82% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.51 | ||
| Debt/FCF | N/A | ||
| Altman-Z | 2.08 |
ROIC/WACC0.16
WACC8.59%
2.3 Liquidity
A Current Ratio of 0.56 indicates that LUV may have some problems paying its short term obligations.
With a Current ratio value of 0.56, LUV perfoms like the industry average, outperforming 40.91% of the companies in the same industry.
LUV has a Quick Ratio of 0.56. This is a bad value and indicates that LUV is not financially healthy enough and could expect problems in meeting its short term obligations.
LUV has a Quick ratio of 0.49. This is in the lower half of the industry: LUV underperforms 63.64% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.56 | ||
| Quick Ratio | 0.49 |
3. Growth
3.1 Past
LUV shows a small growth in Earnings Per Share. In the last year, the EPS has grown by 4.12%.
LUV shows a very negative growth in Earnings Per Share. Measured over the last years, the EPS has been decreasing by -26.91% yearly.
The Revenue has been growing slightly by 1.63% in the past year.
Measured over the past years, LUV shows a small growth in Revenue. The Revenue has been growing by 4.15% on average per year.
EPS 1Y (TTM)4.12%
EPS 3Y-23.26%
EPS 5Y-26.91%
EPS Q2Q%-25.86%
Revenue 1Y (TTM)1.63%
Revenue growth 3Y20.29%
Revenue growth 5Y4.15%
Sales Q2Q%-1.5%
3.2 Future
Based on estimates for the next years, LUV will show a very strong growth in Earnings Per Share. The EPS will grow by 48.23% on average per year.
LUV is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 5.51% yearly.
EPS Next Y0.93%
EPS Next 2Y58.77%
EPS Next 3Y53.56%
EPS Next 5Y48.23%
Revenue Next Year1.99%
Revenue Next 2Y4.47%
Revenue Next 3Y4.82%
Revenue Next 5Y5.51%
3.3 Evolution
When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
4. Valuation
4.1 Price/Earnings Ratio
The Price/Earnings ratio is 32.45, which means the current valuation is very expensive for LUV.
LUV's Price/Earnings is on the same level as the industry average.
LUV's Price/Earnings ratio indicates a similar valuation than the S&P500 average which is at 27.24.
With a Price/Forward Earnings ratio of 13.98, LUV is valued correctly.
The rest of the industry has a similar Price/Forward Earnings ratio as LUV.
The average S&P500 Price/Forward Earnings ratio is at 35.82. LUV is valued rather cheaply when compared to this.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 32.45 | ||
| Fwd PE | 13.98 |
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 | 8.74 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates LUV does not grow enough to justify the current Price/Earnings ratio.
LUV's earnings are expected to grow with 53.56% in the coming years. This may justify a more expensive valuation.
PEG (NY)34.83
PEG (5Y)N/A
EPS Next 2Y58.77%
EPS Next 3Y53.56%
5. Dividend
5.1 Amount
LUV has a Yearly Dividend Yield of 2.32%.
LUV's Dividend Yield is rather good when compared to the industry average which is at 2.74. LUV pays more dividend than 90.91% of the companies in the same industry.
Compared to an average S&P500 Dividend Yield of 2.32, LUV has a dividend comparable with the average S&P500 company.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.32% |
5.2 History
The dividend of LUV has a limited annual growth rate of 0.82%.
LUV has paid a dividend for at least 10 years, which is a reliable track record.
Dividend Growth(5Y)0.82%
Div Incr Years0
Div Non Decr Years0
5.3 Sustainability
108.42% of the earnings are spent on dividend by LUV. This is not a sustainable payout ratio.
The dividend of LUV is growing, but earnings are growing more, so the dividend growth is sustainable.
DP108.42%
EPS Next 2Y58.77%
EPS Next 3Y53.56%
32.77
+1.7 (+5.47%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupTransportation
GICS IndustryPassenger Airlines
Earnings (Last)
Earnings (Next)
Inst Owners101.74%
Inst Owner Change-3.95%
Ins Owners0.89%
Ins Owner Change2.82%
Market Cap17.21B
Analysts55.48
Price Target31.65 (-3.42%)
Short Float %6.99%
Short Ratio3.18
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.32% |
Yearly Dividend0.72
Dividend Growth(5Y)0.82%
DP108.42%
Div Incr Years0
Div Non Decr Years0
Ex-Date
Surprises & Revisions
EPS beat(2)1
Avg EPS beat(2)6.33%
Min EPS beat(2)-16.06%
Max EPS beat(2)28.73%
EPS beat(4)3
Avg EPS beat(4)1010.18%
Min EPS beat(4)-16.06%
Max EPS beat(4)4002.62%
EPS beat(8)5
Avg EPS beat(8)533.15%
EPS beat(12)6
Avg EPS beat(12)336.74%
EPS beat(16)9
Avg EPS beat(16)260.38%
Revenue beat(2)0
Avg Revenue beat(2)-1.14%
Min Revenue beat(2)-1.68%
Max Revenue beat(2)-0.6%
Revenue beat(4)2
Avg Revenue beat(4)-0.26%
Min Revenue beat(4)-1.68%
Max Revenue beat(4)1%
Revenue beat(8)3
Avg Revenue beat(8)-0.68%
Revenue beat(12)3
Avg Revenue beat(12)-0.72%
Revenue beat(16)4
Avg Revenue beat(16)-0.56%
PT rev (1m)0.78%
PT rev (3m)11.37%
EPS NQ rev (1m)-134.47%
EPS NQ rev (3m)-113.57%
EPS NY rev (1m)-10.9%
EPS NY rev (3m)-20.18%
Revenue NQ rev (1m)-1.18%
Revenue NQ rev (3m)-6.54%
Revenue NY rev (1m)-0.17%
Revenue NY rev (3m)-0.4%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 32.45 | ||
| Fwd PE | 13.98 | ||
| P/S | 0.63 | ||
| P/FCF | N/A | ||
| P/OCF | 9.3 | ||
| P/B | 2.15 | ||
| P/tB | 2.56 | ||
| EV/EBITDA | 8.74 |
EPS(TTM)1.01
EY3.08%
EPS(NY)2.34
Fwd EY7.15%
FCF(TTM)-0.52
FCFYN/A
OCF(TTM)3.52
OCFY10.76%
SpS52.31
BVpS15.23
TBVpS12.82
PEG (NY)34.83
PEG (5Y)N/A
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 1.37% | ||
| ROE | 4.9% | ||
| ROCE | 1.78% | ||
| ROIC | 1.35% | ||
| ROICexc | 1.72% | ||
| ROICexgc | 1.89% | ||
| OM | 1.16% | ||
| PM (TTM) | 1.43% | ||
| GM | 73.31% | ||
| FCFM | N/A |
ROA(3y)1.39%
ROA(5y)-0.4%
ROE(3y)4.65%
ROE(5y)-2.26%
ROIC(3y)1.77%
ROIC(5y)N/A
ROICexc(3y)3.36%
ROICexc(5y)N/A
ROICexgc(3y)3.73%
ROICexgc(5y)N/A
ROCE(3y)2.35%
ROCE(5y)N/A
ROICexcg growth 3YN/A
ROICexcg growth 5Y-35.72%
ROICexc growth 3YN/A
ROICexc growth 5Y-35.74%
OM growth 3YN/A
OM growth 5Y-38.41%
PM growth 3Y-35.09%
PM growth 5Y-30.26%
GM growth 3Y0.9%
GM growth 5Y-0.77%
F-Score8
Asset Turnover0.96
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.51 | ||
| Debt/FCF | N/A | ||
| Debt/EBITDA | 2.08 | ||
| Cap/Depr | 129.45% | ||
| Cap/Sales | 7.73% | ||
| Interest Coverage | 1.83 | ||
| Cash Conversion | 94.54% | ||
| Profit Quality | N/A | ||
| Current Ratio | 0.56 | ||
| Quick Ratio | 0.49 | ||
| Altman-Z | 2.08 |
F-Score8
WACC8.59%
ROIC/WACC0.16
Cap/Depr(3y)217.02%
Cap/Depr(5y)146.45%
Cap/Sales(3y)12.59%
Cap/Sales(5y)9.34%
Profit Quality(3y)N/A
Profit Quality(5y)N/A
High Growth Momentum
Growth
EPS 1Y (TTM)4.12%
EPS 3Y-23.26%
EPS 5Y-26.91%
EPS Q2Q%-25.86%
EPS Next Y0.93%
EPS Next 2Y58.77%
EPS Next 3Y53.56%
EPS Next 5Y48.23%
Revenue 1Y (TTM)1.63%
Revenue growth 3Y20.29%
Revenue growth 5Y4.15%
Sales Q2Q%-1.5%
Revenue Next Year1.99%
Revenue Next 2Y4.47%
Revenue Next 3Y4.82%
Revenue Next 5Y5.51%
EBIT growth 1Y281.71%
EBIT growth 3YN/A
EBIT growth 5Y-35.86%
EBIT Next Year498.07%
EBIT Next 3Y124.71%
EBIT Next 5Y72.34%
FCF growth 1Y81.77%
FCF growth 3YN/A
FCF growth 5YN/A
OCF growth 1Y-36.95%
OCF growth 3Y-41.62%
OCF growth 5Y-35.02%