NYSE:LUV

Stock Analysis Report

Executive Summary

Southwest Airlines Co. operates a passenger airline that provides scheduled air transportation services in the United States and near-international markets.

Snowflake

Fundamentals

Adequate balance sheet average dividend payer.


Similar Companies

Share Price & News

How has Southwest Airlines's share price performed over time and what events caused price changes?


Latest Share Price and Events


Market Performance


7 Day Return

-1.5%

LUV

1.3%

US Airlines

0.5%

US Market


1 Year Return

-8.0%

LUV

-1.2%

US Airlines

6.8%

US Market

Return vs Industry: LUV underperformed the US Airlines industry which returned -1.2% over the past year.

Return vs Market: LUV underperformed the US Market which returned 6.8% over the past year.


Shareholder returns

LUVIndustryMarket
7 Day-1.5%1.3%0.5%
30 Day-2.3%-2.6%-0.8%
90 Day-1.6%-6.8%-0.9%
1 Year-6.8%-8.0%0.3%-1.2%9.2%6.8%
3 Year29.8%25.8%28.5%23.5%45.6%36.2%
5 Year63.8%56.3%52.6%43.8%63.2%45.4%

Price Volatility Vs. Market

How volatile is Southwest Airlines's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Southwest Airlines undervalued compared to its fair value and its price relative to the market?

46.4%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: LUV ($53.23) is trading below our estimate of fair value ($99.27)

Significantly Below Fair Value: LUV is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: LUV is poor value based on its PE Ratio (12.3x) compared to the Airlines industry average (8.7x).

PE vs Market: LUV is good value based on its PE Ratio (12.3x) compared to the US market (17.7x).


Price to Earnings Growth Ratio

PEG Ratio: LUV is poor value based on its PEG Ratio (1.3x)


Price to Book Ratio

PB vs Industry: LUV is overvalued based on its PB Ratio (2.9x) compared to the US Airlines industry average (1.7x).


Next Steps

Future Growth

How is Southwest Airlines forecast to perform in the next 1 to 3 years based on estimates from 18 analysts?

9.8%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: LUV's forecast earnings growth (9.8% per year) is above the savings rate (2.7%).

Earnings vs Market: LUV's earnings (9.8% per year) are forecast to grow slower than the US market (14.6% per year).

High Growth Earnings: LUV's earnings are forecast to grow, but not significantly.

Revenue vs Market: LUV's revenue (5.6% per year) is forecast to grow slower than the US market (7.2% per year).

High Growth Revenue: LUV's revenue (5.6% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: LUV's Return on Equity is forecast to be high in 3 years time (21.6%)


Next Steps

Past Performance

How has Southwest Airlines performed over the past 5 years?

16.9%

Historical annual earnings growth


Earnings and Revenue History


Past Earnings Growth Analysis

Earnings Trend: LUV's earnings have grown by 16.9% per year over the past 5 years.

Accelerating Growth: LUV's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: LUV had negative earnings growth (-30.9%) over the past year, making it difficult to compare to the Airlines industry average (-30.9%).


Return on Equity

High ROE: LUV's Return on Equity (24.1%) is considered high.


Return on Assets

ROA vs Industry: LUV has a higher Return on Assets than the Airlines industry average last year.


Return on Capital Employed

ROCE Improving: LUV's Return on Capital Employed has declined over the past 3 years.


Next Steps

Financial Health

How is Southwest Airlines's financial position?


Financial Position Analysis

Short Term Liabilities: LUV's short term assets ($5.6B) do not cover its short term liabilities ($8.6B)

Long Term Liabilities: LUV's short term assets (5.6B) do not cover its long term liabilities (7.8B)


Debt to Equity History and Analysis

Debt Level: LUV's debt to equity ratio (24.6%) is considered satisfactory

Reducing Debt: LUV's debt to equity ratio has reduced from 37.2% to 24.6% over the past 5 years.

Debt Coverage: LUV's debt is well covered by operating cash flow (177.1%).

Interest Coverage: LUV's interest payments on its debt are well covered by EBIT (1544x coverage).


Balance Sheet

Inventory Level: LUV has a high level of physical assets or inventory.

Debt Coverage by Assets: LUV's debt is covered by short term assets (assets are 2.270640x debt).


Next Steps

Dividend

What is Southwest Airlines's current dividend yield, its reliability and sustainability?

1.35%

Current Dividend Yield


Dividend Yield vs Market

company1.4%marketbottom25%1.4%markettop25%3.7%industryaverage2.2%forecastin3Years1.4%

Current dividend yield vs market & industry


Stability and Growth of Payments

Notable Dividend: LUV's dividend (1.35%) isn’t notable compared to the bottom 25% of dividend payers in the US market (1.45%).

High Dividend: LUV's dividend (1.35%) is low compared to the top 25% of dividend payers in the US market (3.73%).

Stable Dividend: LUV's dividends per share have been stable in the past 10 years.

Growing Dividend: LUV's dividend payments have increased over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: With its low payout ratio (15.3%), LUV's dividend payments are well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: LUV's dividends in 3 years are forecast to be well covered by earnings (16.3% payout ratio).


Next Steps

Management

What is the CEO of Southwest Airlines's salary, the management and board of directors tenure and is there insider trading?

4.7yrs

Average management tenure


CEO

Gary Kelly (64yo)

15.3yrs

Tenure

US$7,726,455

Compensation

Mr. Gary C. Kelly has been the Chairman and Chief Executive Officer of Southwest Airlines Co., an affiliate of AirTran Airways, Inc. since May 2008 and July 15, 2004 respectively. Mr. Kelly served as an Ex ...


CEO Compensation Analysis

Compensation vs. Market: Gary's total compensation ($USD7.73M) is about average for companies of similar size in the US market ($USD11.18M).

Compensation vs Earnings: Gary's compensation has been consistent with company performance over the past year.


Management Age and Tenure

4.7yrs

Average Tenure

58yo

Average Age

Experienced Management: LUV's management team is considered experienced (4.7 years average tenure).


Board Age and Tenure

10.9yrs

Average Tenure

72yo

Average Age

Experienced Board: LUV's board of directors are seasoned and experienced ( 10.9 years average tenure).


Insider Trading

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

SellUS$50,24113 Dec 18
John Montford
EntityIndividual
Role
Member of the Board of Directors
Director
Shares980
Max PriceUS$51.27
SellUS$50,04220 Nov 18
John Montford
EntityIndividual
Role
Member of the Board of Directors
Director
Shares956
Max PriceUS$52.35

Ownership Breakdown


Management Team

  • Gary Kelly (64yo)

    Chairman & CEO

    • Tenure: 15.3yrs
    • Compensation: US$7.73m
  • Bob Jordan (58yo)

    Executive Vice President of Corporate Services

    • Tenure: 15.2yrs
    • Compensation: US$3.11m
  • Mike Van de Ven (57yo)

    Chief Operating Officer

    • Tenure: 11.4yrs
    • Compensation: US$3.78m
  • Tammy Romo (57yo)

    Executive VP & CFO

    • Tenure: 7.1yrs
    • Compensation: US$3.14m
  • Tom Nealon (58yo)

    President

    • Tenure: 2.8yrs
    • Compensation: US$3.78m
  • Kathleen Wayton (59yo)

    Senior VP of Technology & Chief Information Officer - Technology

    • Tenure: 2.3yrs
  • Ryan Martinez

    Managing Director of Investor Relations

    • Tenure: 2.1yrs
  • Mark Shaw (56yo)

    Executive VP and Chief Legal & Regulatory Officer

    • Tenure: 6.7yrs
  • Tom Merritt

    VP of Technology – Infrastructure & Services and CTO

    • Tenure: 0.08yrs
  • Ray Schuster

    Managing Director of Accounting & Financial Reporting

    • Tenure: 0.9yrs

Board Members

  • Gary Kelly (64yo)

    Chairman & CEO

    • Tenure: 15.3yrs
    • Compensation: US$7.73m
  • John Denison (74yo)

    Director

    • Tenure: 10.9yrs
    • Compensation: US$281.52k
  • Ron Ricks (69yo)

    Vice Chairman

    • Tenure: 4.3yrs
    • Compensation: US$273.02k
  • David Biegler (73yo)

    Director

    • Tenure: 13.4yrs
    • Compensation: US$283.02k
  • Doug Brooks (66yo)

    Director

    • Tenure: 9.8yrs
    • Compensation: US$248.02k
  • J. Biggins (72yo)

    Director

    • Tenure: 8.2yrs
    • Compensation: US$248.02k
  • John Montford (75yo)

    Director

    • Tenure: 17.8yrs
    • Compensation: US$286.52k
  • William Cunningham (75yo)

    Lead Director

    • Tenure: 0yrs
    • Compensation: US$300.02k
  • Nancy Loeffler (72yo)

    Director

    • Tenure: 16.6yrs
    • Compensation: US$248.02k
  • Tom Gilligan (64yo)

    Director

    • Tenure: 4.1yrs
    • Compensation: US$254.02k

Company Information

Southwest Airlines Co.'s company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Southwest Airlines Co.
  • Ticker: LUV
  • Exchange: NYSE
  • Founded: 1967
  • Industry: Airlines
  • Sector: Transportation
  • Market Cap: US$28.612b
  • Shares outstanding: 537.52m
  • Website: https://www.southwest.com

Number of Employees


Location

  • Southwest Airlines Co.
  • PO Box 36611
  • Dallas
  • Texas
  • 75235
  • United States

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
LUVNYSE (New York Stock Exchange)YesCommon StockUSUSDOct 1975
SWNDB (Deutsche Boerse AG)YesCommon StockDEEUROct 1975
LUV *BMV (Bolsa Mexicana de Valores)YesCommon StockMXMXNOct 1975
0L8FLSE (London Stock Exchange)YesCommon StockGBUSDOct 1975

Biography

Southwest Airlines Co. operates a passenger airline that provides scheduled air transportation services in the United States and near-international markets. As of December 31, 2018, the company operated a  ...


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2019/10/21 23:42
End of Day Share Price2019/10/21 00:00
Earnings2019/06/30
Annual Earnings2018/12/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.