SOUTHWEST AIRLINES CO (LUV) Stock Fundamental Analysis
USA - NYSE:LUV - US8447411088 - Common Stock
32.25 USD
+0.05 (+0.16%)
32.2 USD
-0.05 (-0.16%)
Taking everything into account, LUV scores 4 out of 10 in our fundamental rating. LUV was compared to 21 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.
Of the past 5 years LUV 4 years had a positive operating cash flow.
1.2 Ratios
LUV's Return On Assets of 1.34% is fine compared to the rest of the industry. LUV outperforms 66.67% of its industry peers.
Looking at the Return On Equity, with a value of 4.87%, LUV is in the better half of the industry, outperforming 66.67% of the companies in the same industry.
LUV has a Return On Invested Capital (1.38%) which is in line with its industry peers.
LUV had an Average Return On Invested Capital over the past 3 years of 1.77%. This is significantly below the industry average of 14.46%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 1.34% | ||
| ROE | 4.87% | ||
| ROIC | 1.38% |
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
With a decent Profit Margin value of 1.38%, LUV is doing good in the industry, outperforming 66.67% of the companies in the same industry.
LUV's Profit Margin has declined in the last couple of years.
LUV has a Operating Margin of 1.14%. This is comparable to the rest of the industry: LUV outperforms 42.86% of its industry peers.
In the last couple of years the Operating Margin of LUV has declined.
LUV has a better Gross Margin (73.50%) than 100.00% of its industry peers.
LUV's Gross Margin has been stable in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 1.14% | ||
| PM (TTM) | 1.38% | ||
| GM | 73.5% |
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
LUV has a Return on Invested Capital (ROIC), which is below the Cost of Capital (WACC), which means it is destroying value.
Compared to 1 year ago, LUV has less shares outstanding
Compared to 5 years ago, LUV has more shares outstanding
LUV has a better debt/assets ratio than last year.
2.2 Solvency
LUV has an Altman-Z score of 2.07. This is not the best score and indicates that LUV is in the grey zone with still only limited risk for bankruptcy at the moment.
With an excellent Altman-Z score value of 2.07, LUV belongs to the best of the industry, outperforming 85.71% of the companies in the same industry.
A Debt/Equity ratio of 0.52 indicates that LUV is somewhat dependend on debt financing.
LUV has a Debt to Equity ratio of 0.52. This is amongst the best in the industry. LUV outperforms 85.71% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.52 | ||
| Debt/FCF | N/A | ||
| Altman-Z | 2.07 |
ROIC/WACC0.17
WACC8.16%
2.3 Liquidity
LUV has a Current Ratio of 0.49. 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 worse Current ratio (0.49) than 66.67% of its industry peers.
LUV has a Quick Ratio of 0.49. 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 0.42. This is in the lower half of the industry: LUV underperforms 66.67% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.49 | ||
| Quick Ratio | 0.42 |
3. Growth
3.1 Past
LUV shows a strong negative growth in Earnings Per Share. In the last year the EPS decreased by -40.76%.
The earnings per share for LUV have been decreasing by -26.91% on average. This is quite bad
Looking at the last year, LUV shows a small growth in Revenue. The Revenue has grown by 0.64% in the last year.
The Revenue has been growing slightly by 4.15% on average over the past years.
EPS 1Y (TTM)-40.76%
EPS 3Y-23.26%
EPS 5Y-26.91%
EPS Q2Q%-7.89%
Revenue 1Y (TTM)0.64%
Revenue growth 3Y20.29%
Revenue growth 5Y4.15%
Sales Q2Q%1.15%
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 Y4.89%
EPS Next 2Y62.17%
EPS Next 3Y54.07%
EPS Next 5Y48.23%
Revenue Next Year2.27%
Revenue Next 2Y4.67%
Revenue Next 3Y4.96%
Revenue Next 5Y5.51%
3.3 Evolution
The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.
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
A Price/Earnings ratio of 34.68 indicates a quite expensive valuation of LUV.
LUV's Price/Earnings is on the same level as the industry average.
LUV's Price/Earnings ratio indicates a valuation a bit more expensive than the S&P500 average which is at 26.89.
The Price/Forward Earnings ratio is 13.19, which indicates a correct valuation of LUV.
The rest of the industry has a similar Price/Forward Earnings ratio as LUV.
Compared to an average S&P500 Price/Forward Earnings ratio of 22.99, LUV is valued a bit cheaper.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 34.68 | ||
| Fwd PE | 13.19 |
4.2 Price Multiples
The rest of the industry has a similar Enterprise Value to EBITDA ratio as LUV.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | N/A | ||
| EV/EBITDA | 9.36 |
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.
A more expensive valuation may be justified as LUV's earnings are expected to grow with 54.07% in the coming years.
PEG (NY)7.09
PEG (5Y)N/A
EPS Next 2Y62.17%
EPS Next 3Y54.07%
5. Dividend
5.1 Amount
LUV has a Yearly Dividend Yield of 2.24%. Purely for dividend investing, there may be better candidates out there.
Compared to an average industry Dividend Yield of 2.68, LUV pays a better dividend. On top of this LUV pays more dividend than 90.48% of the companies listed in the same industry.
LUV's Dividend Yield is comparable with the S&P500 average which is at 2.31.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.24% |
5.2 History
The dividend of LUV has a limited annual growth rate of 0.82%.
LUV has been paying a dividend for at least 10 years, so it has a reliable track record.
Dividend Growth(5Y)0.82%
Div Incr Years0
Div Non Decr Years0
5.3 Sustainability
105.01% 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.
DP105.01%
EPS Next 2Y62.17%
EPS Next 3Y54.07%
32.25
+0.05 (+0.16%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupTransportation
GICS IndustryPassenger Airlines
Earnings (Last)
Earnings (Next)
Inst Owners95.8%
Inst Owner Change0%
Ins Owners0.89%
Ins Owner Change1.11%
Market Cap16.94B
Revenue(TTM)27.55B
Net Income(TTM)379.00M
Analysts55.86
Price Target32.37 (0.37%)
Short Float %6.27%
Short Ratio3.59
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.24% |
Yearly Dividend0.72
Dividend Growth(5Y)0.82%
DP105.01%
Div Incr Years0
Div Non Decr Years0
Ex-Date
Surprises & Revisions
EPS beat(2)N/A
Avg EPS beat(2)N/A
Min EPS beat(2)N/A
Max EPS beat(2)N/A
EPS beat(4)N/A
Avg EPS beat(4)N/A
Min EPS beat(4)N/A
Max EPS beat(4)N/A
EPS beat(8)N/A
Avg EPS beat(8)N/A
EPS beat(12)N/A
Avg EPS beat(12)N/A
EPS beat(16)N/A
Avg EPS beat(16)N/A
Revenue beat(2)0
Avg Revenue beat(2)-1.13%
Min Revenue beat(2)-1.68%
Max Revenue beat(2)-0.59%
Revenue beat(4)1
Avg Revenue beat(4)-0.65%
Min Revenue beat(4)-1.68%
Max Revenue beat(4)0.26%
Revenue beat(8)3
Avg Revenue beat(8)-0.55%
Revenue beat(12)3
Avg Revenue beat(12)-0.7%
Revenue beat(16)3
Avg Revenue beat(16)-0.66%
PT rev (1m)-0.2%
PT rev (3m)3.06%
EPS NQ rev (1m)32.71%
EPS NQ rev (3m)-121.86%
EPS NY rev (1m)2.56%
EPS NY rev (3m)-7.4%
Revenue NQ rev (1m)0.23%
Revenue NQ rev (3m)-0.88%
Revenue NY rev (1m)0.28%
Revenue NY rev (3m)0.1%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 34.68 | ||
| Fwd PE | 13.19 | ||
| P/S | 0.61 | ||
| P/FCF | N/A | ||
| P/OCF | 8.37 | ||
| P/B | 2.18 | ||
| P/tB | 2.6 | ||
| EV/EBITDA | 9.36 |
EPS(TTM)0.93
EY2.88%
EPS(NY)2.45
Fwd EY7.58%
FCF(TTM)-0.48
FCFYN/A
OCF(TTM)3.85
OCFY11.94%
SpS52.46
BVpS14.81
TBVpS12.4
PEG (NY)7.09
PEG (5Y)N/A
Graham Number17.6
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 1.34% | ||
| ROE | 4.87% | ||
| ROCE | 1.82% | ||
| ROIC | 1.38% | ||
| ROICexc | 1.67% | ||
| ROICexgc | 1.83% | ||
| OM | 1.14% | ||
| PM (TTM) | 1.38% | ||
| GM | 73.5% | ||
| 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
ROICexgc growth 3YN/A
ROICexgc 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 Turnover0.97
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.52 | ||
| Debt/FCF | N/A | ||
| Debt/EBITDA | 2.13 | ||
| Cap/Depr | 142.48% | ||
| Cap/Sales | 8.25% | ||
| Interest Coverage | 1.93 | ||
| Cash Conversion | 105.86% | ||
| Profit Quality | N/A | ||
| Current Ratio | 0.49 | ||
| Quick Ratio | 0.42 | ||
| Altman-Z | 2.07 |
F-Score8
WACC8.16%
ROIC/WACC0.17
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)-40.76%
EPS 3Y-23.26%
EPS 5Y-26.91%
EPS Q2Q%-7.89%
EPS Next Y4.89%
EPS Next 2Y62.17%
EPS Next 3Y54.07%
EPS Next 5Y48.23%
Revenue 1Y (TTM)0.64%
Revenue growth 3Y20.29%
Revenue growth 5Y4.15%
Sales Q2Q%1.15%
Revenue Next Year2.27%
Revenue Next 2Y4.67%
Revenue Next 3Y4.96%
Revenue Next 5Y5.51%
EBIT growth 1Y224.02%
EBIT growth 3YN/A
EBIT growth 5Y-35.86%
EBIT Next Year500.84%
EBIT Next 3Y124.19%
EBIT Next 5Y72.34%
FCF growth 1Y71.51%
FCF growth 3YN/A
FCF growth 5YN/A
OCF growth 1Y-39.03%
OCF growth 3Y-41.62%
OCF growth 5Y-35.02%
SOUTHWEST AIRLINES CO / LUV FAQ
Can you provide the ChartMill fundamental rating for SOUTHWEST AIRLINES CO?
ChartMill assigns a fundamental rating of 4 / 10 to LUV.
What is the valuation status for LUV stock?
ChartMill assigns a valuation rating of 2 / 10 to SOUTHWEST AIRLINES CO (LUV). This can be considered as Overvalued.
What is the profitability of LUV stock?
SOUTHWEST AIRLINES CO (LUV) has a profitability rating of 5 / 10.
Can you provide the PE and PB ratios for LUV stock?
The Price/Earnings (PE) ratio for SOUTHWEST AIRLINES CO (LUV) is 34.68 and the Price/Book (PB) ratio is 2.18.
Can you provide the financial health for LUV stock?
The financial health rating of SOUTHWEST AIRLINES CO (LUV) is 3 / 10.