NYSE:LUV

Stock Analysis Report

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Executive Summary

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


Snowflake Analysis

Exceptional growth potential and slightly overvalued.


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

Stable Share Price: LUV is not significantly more volatile than the rest of US stocks over the past 3 months, typically moving +/- 6% a week.

Volatility Over Time: LUV's weekly volatility (6%) has been stable over the past year.


Market Performance


7 Day Return

-1.7%

LUV

-0.9%

US Airlines

0.7%

US Market


1 Year Return

-14.9%

LUV

-26.8%

US Airlines

22.2%

US Market

Return vs Industry: LUV exceeded the US Airlines industry which returned -27.8% over the past year.

Return vs Market: LUV underperformed the US Market which returned 22.7% over the past year.


Shareholder returns

LUVIndustryMarket
7 Day-1.7%-0.9%0.7%
30 Day23.6%31.5%11.8%
90 Day22.5%26.6%8.6%
1 Year-14.3%-14.9%-26.5%-26.8%25.0%22.2%
3 Year-20.1%-22.4%-23.1%-25.0%49.4%39.5%
5 Year11.6%6.6%-7.9%-11.1%100.2%78.1%

Long-Term 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?

30.6%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: LUV ($47.45) is trading below our estimate of fair value ($68.42)

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


Price To Earnings Ratio

PE vs Industry: LUV is unprofitable, so we can't compare its PE Ratio to the XN Airlines industry average.

PE vs Market: LUV is unprofitable, so we can't compare its PE Ratio to the US market.


Price to Earnings Growth Ratio

PEG Ratio: Insufficient data to calculate LUV's PEG Ratio to determine if it is good value.


Price to Book Ratio

PB vs Industry: LUV is overvalued based on its PB Ratio (2.9x) compared to the US Airlines industry average (1.3x).


Next Steps

Future Growth

How is Southwest Airlines forecast to perform in the next 1 to 3 years based on estimates from 19 analysts?

91.2%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: LUV is forecast to become profitable over the next 3 years, which is considered faster growth than the savings rate (2.2%).

Earnings vs Market: LUV is forecast to become profitable over the next 3 years, which is considered above average market growth.

High Growth Earnings: LUV's is expected to become profitable in the next 3 years.

Revenue vs Market: LUV's revenue (25.5% per year) is forecast to grow faster than the US market (10.2% per year).

High Growth Revenue: LUV's revenue (25.5% per year) is forecast to grow faster 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 (20.8%)


Next Steps

Past Performance

How has Southwest Airlines performed over the past 5 years?

-11.1%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: LUV is currently unprofitable.

Growing Profit Margin: LUV is currently unprofitable.


Past Earnings Growth Analysis

Earnings Trend: LUV is unprofitable, and losses have increased over the past 5 years at a rate of 11.1% per year.

Accelerating Growth: Unable to compare LUV's earnings growth over the past year to its 5-year average as it is currently unprofitable

Earnings vs Industry: LUV is unprofitable, making it difficult to compare its past year earnings growth to the Airlines industry (-48.2%).


Return on Equity

High ROE: LUV has a negative Return on Equity (-16.92%), as it is currently unprofitable.


Next Steps

Financial Health

How is Southwest Airlines's financial position?


Financial Position Analysis

Short Term Liabilities: LUV's short term assets ($16.1B) exceed its short term liabilities ($7.8B).

Long Term Liabilities: LUV's short term assets ($16.1B) do not cover its long term liabilities ($18.0B).


Debt to Equity History and Analysis

Debt Level: LUV's debt to equity ratio (111.5%) is considered high.

Reducing Debt: LUV's debt to equity ratio has increased from 39.2% to 111.5% over the past 5 years.

Debt Coverage: LUV's debt is not well covered by operating cash flow (2.7%).

Interest Coverage: Insufficient data to determine if LUV's interest payments on its debt are well covered by EBIT.


Balance Sheet


Next Steps

Dividend

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

0.45%

Forecast Dividend Yield


Dividend Yield vs Market

Notable Dividend: Unable to evaluate LUV's dividend yield against the bottom 25% of dividend payers, as the company has not reported any recent payouts.

High Dividend: Unable to evaluate LUV's dividend yield against the top 25% of dividend payers, as the company has not reported any recent payouts.


Stability and Growth of Payments

Stable Dividend: Insufficient data to determine if LUV's dividends per share have been stable in the past.

Growing Dividend: Insufficient data to determine if LUV's dividend payments have been increasing.


Current Payout to Shareholders

Dividend Coverage: LUV is not paying a notable dividend for the US market.


Future Payout to Shareholders

Future Dividend Coverage: No need to calculate the sustainability of LUV's dividend in 3 years as they are not forecast to pay a notable one for the US market.


Next Steps

Management

How experienced are the management team and are they aligned to shareholders interests?

3.9yrs

Average management tenure


CEO

Gary Kelly (65 yo)

16.42yrs

Tenure

US$8,771,124

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 ($USD8.77M) is about average for companies of similar size in the US market ($USD10.98M).

Compensation vs Earnings: Gary's compensation has increased whilst the company is unprofitable.


Leadership Team

NamePositionTenureCompensationOwnership
Gary Kelly
Chairman & CEO16.42yrsUS$8.77m0.11%
$ 31.9m
Thomas Nealon
President3.92yrsUS$3.84m0.018%
$ 5.1m
Tammy Romo
Executive VP & CFO8.25yrsUS$3.19m0.020%
$ 5.5m
Michael Van de Ven
Chief Operating Officer12.58yrsUS$3.84m0.030%
$ 8.4m
Robert Jordan
Executive Vice President of Corporate Services16.33yrsUS$3.16m0.017%
$ 4.8m
Ray Schuster
Managing Director of Accounting & Financial Reporting2.08yrsno datano data
Thomas Merritt
VP of Technology – Infrastructure & Services and CTO1.25yrsno datano data
Kathleen Wayton
Senior VP of Technology & Chief Information Officer3.42yrsno datano data
Ryan Martinez
Managing Director of Investor Relations3.25yrsno datano data
Mark Shaw
Executive VP and Chief Legal & Regulatory Officer7.83yrsno data0.0038%
$ 1.1m
Linda Rutherford
Senior VP & Chief Communications Officerno datano datano data
Ryan Green
Senior VP & Chief Marketing Officer3.75yrsno datano data

3.9yrs

Average Tenure

59yo

Average Age

Experienced Management: LUV's management team is considered experienced (3.9 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
Gary Kelly
Chairman & CEO16.42yrsUS$8.77m0.11%
$ 31.9m
John Denison
Independent Director12.08yrsUS$290.04k0.010%
$ 2.8m
Ron Ricks
Vice Chairman5.42yrsUS$281.54k0.033%
$ 9.4m
David Biegler
Independent Director14.58yrsUS$290.04k0.0097%
$ 2.7m
Douglas Brooks
Independent Director10.92yrsUS$256.54k0.0098%
$ 2.7m
J. Biggins
Independent Director9.33yrsUS$255.04k0.0081%
$ 2.3m
John Montford
Independent Director18.92yrsUS$293.54k0.0039%
$ 1.1m
William Cunningham
Independent Lead Directorno dataUS$308.54k0.014%
$ 3.9m
Nancy Loeffler
Independent Director17.75yrsUS$255.04k0.0080%
$ 2.3m
Thomas Gilligan
Independent Director5.25yrsUS$262.54k0.0028%
$ 787.0k
Grace Lieblein
Independent Director4.92yrsUS$256.54k0.0029%
$ 806.6k

11.5yrs

Average Tenure

73yo

Average Age

Experienced Board: LUV's board of directors are seasoned and experienced ( 11.5 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: LUV insiders have only sold shares in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have been diluted in the past year, with total shares outstanding growing by 12.2%.


Top Shareholders

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$28.008b
  • Shares outstanding: 590.27m
  • Website: https://www.southwest.com

Number of Employees


Location

  • Southwest Airlines Co.
  • PO Box 36611
  • Dallas
  • Texas
  • 75235-1611
  • United States

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
LUVNYSE (New York Stock Exchange)YesCommon StockUSUSDOct 1975
SWNDB (Deutsche Boerse AG)YesCommon StockDEEUROct 1975
SWNXTRA (XETRA Trading Platform)YesCommon StockDEEUROct 1975
LUV *BMV (Bolsa Mexicana de Valores)YesCommon StockMXMXNOct 1975
0L8FLSE (London Stock Exchange)YesCommon StockGBUSDOct 1975
S1OU34BOVESPA (Bolsa de Valores de Sao Paulo)BDR EACH 1 REPR 1 SHS UNSPONBRBRLJan 2020

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, 2019, 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 Analysis2020/12/03 00:28
End of Day Share Price2020/12/02 00:00
Earnings2020/09/30
Annual Earnings2019/12/31


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.