LUV

Southwest AirlinesNYSE:LUV Stock Report

Market Cap

US$29.0b

7D

2.5%

1Y

23.2%

Updated

18 Sep, 2021

Data

Company Financials +
LUV fundamental analysis
Snowflake Score
Valuation2/6
Future Growth6/6
Past Performance0/6
Financial Health2/6
Dividends0/6

LUV Overview

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

Southwest Airlines Competitors

Price History & Performance

Summary of all time highs, changes and price drops for Southwest Airlines
Historical stock prices
Current Share PriceUS$49.08
52 Week HighUS$35.82
52 Week LowUS$64.75
Beta1.24
1 Month Change3.41%
3 Month Change-11.07%
1 Year Change23.22%
3 Year Change-23.04%
5 Year Change31.79%
Change since IPO4,510.74%

Recent News & Updates

Aug 20

Southwest Airlines: The Low-Cost Strategy Prevails Through The Pandemic

Southwest has proven the low-cost model works in good times, but how has it fared during the pandemic? The airline consistently beats the competition in operating margins while having a lower load factor. With superior results and a rosy outlook the stock has been run up to levels I'm not interested at.

Jul 28

Southwest Airlines: Trouble Beneath The Surface

Investors have historically seen Southwest Airlines as the highest-quality business in the U.S. airline industry by far. Southwest entered 2020 with the best balance sheet in the airline industry and has moved aggressively to enter new markets over the past year. However, while all its main rivals worked hard to cut costs during the pandemic, Southwest Airlines didn't take any game-changing cost actions. Southwest's decision to shift its near-term aircraft purchases to the 737 MAX 7 (rather than the MAX 8) will drive unit cost pressure over the next several years, weighing on margins. Alaska Air Group now looks like the highest-quality company in the U.S. airline industry.

Jul 23
A Look At The Intrinsic Value Of Southwest Airlines Co. (NYSE:LUV)

A Look At The Intrinsic Value Of Southwest Airlines Co. (NYSE:LUV)

Today we'll do a simple run through of a valuation method used to estimate the attractiveness of Southwest Airlines Co...

Jul 05
Southwest Airlines (NYSE:LUV) Has Debt But No Earnings; Should You Worry?

Southwest Airlines (NYSE:LUV) Has Debt But No Earnings; Should You Worry?

Some say volatility, rather than debt, is the best way to think about risk as an investor, but Warren Buffett famously...

Shareholder Returns

LUVUS AirlinesUS Market
7D2.5%2.5%-0.6%
1Y23.2%27.1%33.8%

Return vs Industry: LUV underperformed the US Airlines industry which returned 27.1% over the past year.

Return vs Market: LUV underperformed the US Market which returned 33.8% over the past year.

Price Volatility

Is LUV's price volatile compared to industry and market?
LUV volatility
LUV Beta1.24
Industry Beta1.51
Market Beta1

Stable Share Price: LUV is not significantly more volatile than the rest of US stocks over the past 3 months, typically moving +/- 5% a week.

Volatility Over Time: LUV's weekly volatility (5%) has been stable over the past year.

About the Company

FoundedEmployeesCEOWebsite
196754,448Gary Kellyhttps://www.southwest.com

Southwest Airlines Co. operates as a passenger airline company that provide scheduled air transportation services in the United States and near-international markets. As of December 31, 2020, the company operated a total fleet of 718 Boeing 737 aircrafts; and served 107 destinations in 40 states, the District of Columbia, and the Commonwealth of Puerto Rico, as well as ten near-international countries, including Mexico, Jamaica, the Bahamas, Aruba, the Dominican Republic, Costa Rica, Belize, Cuba, the Cayman Islands, and Turks and Caicos. Its services also cover destinations in Hilo on Hawaii; Cozumel, Mexico; Steamboat Springs, Colorado; Miami, Florida; Palm Springs, California; and Montrose (Telluride and Crested Butte), Colorado.

Valuation

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

>50%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: LUV ($49.08) is trading below our estimate of fair value ($99.94)

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 US 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 (3x) compared to the US Airlines industry average (2.4x).


Future Growth

How is Southwest Airlines forecast to perform in the next 1 to 3 years based on estimates from 20 analysts?

56.9%

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%).

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 (20.2% per year) is forecast to grow faster than the US market (9.8% per year).

High Growth Revenue: LUV's revenue (20.2% 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 (22.1%)


Past Performance

How has Southwest Airlines performed over the past 5 years?

-38.8%

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 38.8% 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 (5.3%).


Return on Equity

High ROE: LUV has a negative Return on Equity (-16.54%), as it is currently unprofitable.


Financial Health

How is Southwest Airlines's financial position?


Financial Position Analysis

Short Term Liabilities: LUV's short term assets ($19.2B) exceed its short term liabilities ($12.5B).

Long Term Liabilities: LUV's short term assets ($19.2B) exceed its long term liabilities ($16.0B).


Debt to Equity History and Analysis

Debt Level: LUV's debt to equity ratio (117.2%) is considered high.

Reducing Debt: LUV's debt to equity ratio has increased from 42.9% to 117.2% over the past 5 years.

Debt Coverage: LUV's debt is not well covered by operating cash flow (8.8%).

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


Balance Sheet


Dividend

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

0.40%

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?

4.5yrs

Average management tenure


CEO

Gary Kelly (66 yo)

17.17yrs

Tenure

US$9,235,103

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 ($USD9.24M) is about average for companies of similar size in the US market ($USD11.36M).

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


Leadership Team

Experienced Management: LUV's management team is considered experienced (4.5 years average tenure).


Board Members

Experienced Board: LUV's board of directors are seasoned and experienced ( 12.3 years average tenure).


Ownership

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


Insider Trading Volume

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


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Company Information

Southwest Airlines Co.'s 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$29.038b
  • Shares outstanding: 591.64m
  • Website: https://www.southwest.com

Number of Employees


Location

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

Listings


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2021/09/18 22:03
End of Day Share Price2021/09/17 00:00
Earnings2021/06/30
Annual Earnings2020/12/31


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.