Southwest Airlines Company logged a -0.3% change during today's morning session, and is now trading at a price of $26.48 per share.
Southwest Airlines Company returned losses of -17.0% last year, with its stock price reaching a high of $40.38 and a low of $26.48. Over the same period, the stock underperformed the S&P 500 index by -33.0%. As of April 2023, the company's 50-day average price was $31.99. Southwest Airlines Co. operates as a passenger airline company that provide scheduled air transportation services in the United States and near-international markets. Based in Dallas, TX, the large-cap Consumer Discretionary company has 71,299 full time employees. Southwest Airlines Company has offered a 2.0% dividend yield over the last 12 months.
Low Leverage Levels but a Declining EPS Growth Trend:
|Net Income (MM)||$3,357||$2,465||$2,300||-$3,074||$977||$539|
|Net Interest Expense (MM)||-$79||-$62||-$28||-$317||-$454||-$123|
|Depreciation & Amort. (MM)||-$1,218||-$1,201||-$1,219||-$1,255||-$1,272||-$1,351|
|Earnings Per Share||$5.57||$4.29||$4.27||-$5.44||$1.61||$0.89|
|Diluted Shares (MM)||603||574||539||565||607||607|
|Free Cash Flow (MM)||$6,178||$6,869||$4,614||-$1,040||$2,833||$7,736|
|Capital Expenditures (MM)||-$2,249||-$1,976||-$627||-$87||-$511||-$3,946|
|Net Current Assets (MM)||-$10,654||-$11,362||-$10,089||-$10,539||-$7,870||-$9,874|
|Long Term Debt (MM)||$3,320||$2,771||$1,846||$10,111||$10,274||$8,046|
|Net Debt / EBITDA||0.09||-0.07||-0.34||1.17||-1.6||-1.78|
Southwest Airlines Company has low leverage, wider gross margins than its peer group, and decent operating margins with a negative growth trend. However, the firm has declining EPS growth. Finally, we note that Southwest Airlines Company has weak revenue growth and a flat capital expenditure trend, irregular cash flows, and just enough current assets to cover current liabilities.
A Lower P/B Ratio Than Its Sector Average but Trades Above Its Graham Number:
Southwest Airlines Company has a trailing twelve month P/E ratio of 34.0, compared to an average of 22.33 for the Consumer Discretionary sector. Based on its EPS guidance of $2.62, the company has a forward P/E ratio of 12.2. The company doesn't issue forward earnings guidance, and the compound average growth rate of its last 6 years of reported EPS is -25.7%. On this basis, the company's PEG ratio is -1.33, which indicates that its shares are overpriced. In contrast, the market is likely undervaluing Southwest Airlines Company in terms of its equity because its P/B ratio is 1.46 while the sector average is 3.12. The company's shares are currently trading 41.0% above their Graham number. In conclusion, Southwest Airlines Company's impressive cash flow trend, decent P/B ratio, and reasonable use of leverage demonstrate that the company may still be fairly valued — despite its elevated earnings multiple.
Southwest Airlines Company Has an Average Rating of Hold:
The 15 analysts following Southwest Airlines Company have set target prices ranging from $25.0 to $55.0 per share, for an average of $34.72 with a hold rating. As of April 2023, the company is trading -7.9% away from its average target price, indicating that there is an analyst consensus of strong upside potential.
Southwest Airlines Company has an average amount of shares sold short because 4.5% of the company's shares are sold short. Institutions own 78.0% of the company's shares, and the insider ownership rate stands at 0.36%, suggesting a small amount of insider investors. The largest shareholder is Vanguard Group Inc, whose 11% stake in the company is worth $1,747,522,810.