SOUTHWEST AIRLINES CO (LUV) Stock Fundamental Analysis
USA - New York Stock Exchange - NYSE:LUV - US8447411088 - Common Stock
34.81 USD
-0.25 (-0.71%)
34.9 USD
+0.09 (+0.26%)
Overall LUV gets a fundamental rating of 4 out of 10. We evaluated LUV against 22 industry peers in the Passenger Airlines industry. There are concerns on the financial health of LUV while its profitability can be described as average. LUV is quite expensive at the moment. It does show a decent growth rate.
1. Profitability
1.1 Basic Checks
In the past year LUV was profitable.
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 has a Return On Assets of 1.34%. This is in the better half of the industry: LUV outperforms 68.18% of its industry peers.
The Return On Equity of LUV (4.87%) is better than 68.18% of its industry peers.
LUV has a Return On Invested Capital of 1.38%. This is comparable to the rest of the industry: LUV outperforms 45.45% of 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 13.76%.
| 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
The Profit Margin of LUV (1.38%) is better than 68.18% of its industry peers.
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 45.45% of its industry peers.
In the last couple of years the Operating Margin of LUV has declined.
LUV's Gross Margin of 73.50% is amongst the best of the industry. LUV outperforms 100.00% of its industry peers.
In the last couple of years the Gross Margin of LUV has remained more or less at the same level.
| 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
With a Return on Invested Capital (ROIC) below the Cost of Capital (WACC), LUV is destroying value.
The number of shares outstanding for LUV has been reduced compared to 1 year ago.
The number of shares outstanding for LUV has been increased compared to 5 years ago.
LUV has a better debt/assets ratio than last year.
2.2 Solvency
LUV has an Altman-Z score of 2.11. 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 2.11, LUV belongs to the best of the industry, outperforming 86.36% 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 better Debt to Equity ratio (0.52) than 90.91% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.52 | ||
| Debt/FCF | N/A | ||
| Altman-Z | 2.11 |
ROIC/WACC0.17
WACC7.98%
2.3 Liquidity
A Current Ratio of 0.49 indicates that LUV may have some problems paying its short term obligations.
LUV's Current ratio of 0.49 is on the low side compared to the rest of the industry. LUV is outperformed by 63.64% of its industry peers.
A Quick Ratio of 0.42 indicates that LUV may have some problems paying its short term obligations.
LUV's Quick ratio of 0.42 is on the low side compared to the rest of the industry. LUV is outperformed by 63.64% 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 growth in Earnings Per Share. In the last year, the EPS has been growing by 31.08%, which is quite impressive.
The earnings per share for LUV have been decreasing by -26.91% on average. This is quite bad
The Revenue has been growing slightly by 0.64% in the past year.
LUV shows a small growth in Revenue. Measured over the last years, the Revenue has been growing by 4.15% yearly.
EPS 1Y (TTM)31.08%
EPS 3Y-23.26%
EPS 5Y-26.91%
EPS Q2Q%-26.67%
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 47.55% on average per year.
The Revenue is expected to grow by 5.74% on average over the next years.
EPS Next Y21.15%
EPS Next 2Y70.34%
EPS Next 3Y56.92%
EPS Next 5Y47.55%
Revenue Next Year2.59%
Revenue Next 2Y5.18%
Revenue Next 3Y5.21%
Revenue Next 5Y5.74%
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 accelerating: in the next years the growth will be better than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
The Price/Earnings ratio is 35.89, which means the current valuation is very expensive for LUV.
LUV's Price/Earnings ratio is in line with the industry average.
Compared to an average S&P500 Price/Earnings ratio of 26.31, LUV is valued a bit more expensive.
Based on the Price/Forward Earnings ratio of 12.90, the valuation of LUV can be described as correct.
Compared to the rest of the industry, the Price/Forward Earnings ratio of LUV is on the same level as its industry peers.
When comparing the Price/Forward Earnings ratio of LUV to the average of the S&P500 Index (36.59), we can say LUV is valued rather cheaply.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 35.89 | ||
| Fwd PE | 12.9 |
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 | 10.14 |
4.3 Compensation for Growth
The PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a correct valuation of the company.
A more expensive valuation may be justified as LUV's earnings are expected to grow with 56.92% in the coming years.
PEG (NY)1.7
PEG (5Y)N/A
EPS Next 2Y70.34%
EPS Next 3Y56.92%
5. Dividend
5.1 Amount
LUV has a Yearly Dividend Yield of 2.05%.
Compared to an average industry Dividend Yield of 2.93, LUV pays a better dividend. On top of this LUV pays more dividend than 86.36% of the companies listed in the same industry.
Compared to an average S&P500 Dividend Yield of 2.34, LUV has a dividend comparable with the average S&P500 company.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.05% |
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
105.01% of the earnings are spent on dividend by LUV. This is not a sustainable payout ratio.
LUV's earnings are growing more than its dividend. This makes the dividend growth sustainable.
DP105.01%
EPS Next 2Y70.34%
EPS Next 3Y56.92%
34.81
-0.25 (-0.71%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupTransportation
GICS IndustryPassenger Airlines
Earnings (Last)
Earnings (Next)
Inst Owners95.8%
Inst Owner Change1.69%
Ins Owners0.89%
Ins Owner Change0.07%
Market Cap18.00B
Revenue(TTM)27.55B
Net Income(TTM)379.00M
Analysts56.67
Price Target33.9 (-2.61%)
Short Float %6.46%
Short Ratio3.47
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.05% |
Yearly Dividend0.72
Dividend Growth(5Y)0.82%
DP105.01%
Div Incr Years0
Div Non Decr Years0
Ex-Date
Surprises & Revisions
EPS beat(2)1
Avg EPS beat(2)208.35%
Min EPS beat(2)-16.06%
Max EPS beat(2)432.76%
EPS beat(4)3
Avg EPS beat(4)117.71%
Min EPS beat(4)-16.06%
Max EPS beat(4)432.76%
EPS beat(8)6
Avg EPS beat(8)587.29%
EPS beat(12)6
Avg EPS beat(12)371.4%
EPS beat(16)9
Avg EPS beat(16)286.39%
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)4.72%
PT rev (3m)7.09%
EPS NQ rev (1m)0.93%
EPS NQ rev (3m)3.31%
EPS NY rev (1m)15.5%
EPS NY rev (3m)20.03%
Revenue NQ rev (1m)0.8%
Revenue NQ rev (3m)1.95%
Revenue NY rev (1m)0.32%
Revenue NY rev (3m)0.59%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 35.89 | ||
| Fwd PE | 12.9 | ||
| P/S | 0.66 | ||
| P/FCF | N/A | ||
| P/OCF | 9.04 | ||
| P/B | 2.35 | ||
| P/tB | 2.81 | ||
| EV/EBITDA | 10.14 |
EPS(TTM)0.97
EY2.79%
EPS(NY)2.7
Fwd EY7.75%
FCF(TTM)-0.48
FCFYN/A
OCF(TTM)3.85
OCFY11.07%
SpS52.46
BVpS14.81
TBVpS12.4
PEG (NY)1.7
PEG (5Y)N/A
Graham Number17.98
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 | 2.11 |
F-Score8
WACC7.98%
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)31.08%
EPS 3Y-23.26%
EPS 5Y-26.91%
EPS Q2Q%-26.67%
EPS Next Y21.15%
EPS Next 2Y70.34%
EPS Next 3Y56.92%
EPS Next 5Y47.55%
Revenue 1Y (TTM)0.64%
Revenue growth 3Y20.29%
Revenue growth 5Y4.15%
Sales Q2Q%1.15%
Revenue Next Year2.59%
Revenue Next 2Y5.18%
Revenue Next 3Y5.21%
Revenue Next 5Y5.74%
EBIT growth 1Y224.02%
EBIT growth 3YN/A
EBIT growth 5Y-35.86%
EBIT Next Year500.84%
EBIT Next 3Y124.19%
EBIT Next 5Y70.85%
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 3 / 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 35.89 and the Price/Book (PB) ratio is 2.35.
Can you provide the financial health for LUV stock?
The financial health rating of SOUTHWEST AIRLINES CO (LUV) is 3 / 10.