Southwest Airlines Co

Consumer Discretionary
Air Freight/Delivery Services
www.southwest.com

Earnings Score
Moat Score
Safety Score

Market Cap $17.83B
PE 38
Debt $8.33B
Cash $7.51B
EV $18.65B
FCF -$1.59B

Earnings

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Sales & Net Margins

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Earnings	$465.00M
EBIT	$598.00M
ROE	4%
ROA	2%
FCF	-$1.59B
Equity	$10.35B
Growth Stability	-5K%
PE	38.34
PEG	42.81
PB	1.72
P/FCF	-11.2
P/S	0.65
Price/Cash	0.42
Debt/Equity	0.81
Debt/FCF	-5.23
Net Margins	2%
Op. Margins	2%
Earnings CAGR	-10%
Sales Growth YoY	2%
Sales Growth QoQ	1%
Sales CAGR	2%
FCF CAGR	-1%
Equity CAGR	4%
Earnings Stability	0.09
Earnings Growth YoY	-204%
Earnings Growth QoQ	290%

Earnings CAGR 5Y	1%
Sales CAGR 5Y	23%
FCF CAGR 5Y	-1%
Equity CAGR 5Y	2%
Earnings CAGR 3Y	13%
Sales CAGR 3Y	13%
Equity CAGR 3Y	-2%
Market Cap	$17.83B
Revenue	$27.48B
Dividend Yield	2%
Payout Ratio	92%
Assets	$33.75B
Total Debt	$8.33B
Cash	$7.51B
Shares Outstanding	598M
EV	18.65B
Earnings Score	5%
Moat Score	43%
Safety Score	35%
Final Score	27%
Working Capital	-1B
Current Ratio	0.92
Shares Growth 3y	0%
Equity Growth QoQ	-1%
Equity Growth YoY	-2%

Assets & ROA

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Stockholders Equity & ROE

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Southwest Airlines is the largest domestic carrier in the United States, as measured by the number of originating passengers boarded. Southwest operates over 700 aircraft in an all-Boeing 737 fleet. Despite expanding into longer routes and business travel, the airline still specializes in short-haul leisure flights, using a point-to-point network. Southwest operates a low-cost carrier business model.

SEC Filings

Direct access to Southwest Airlines Co (LUV) Annual Reports (10K) and Quarterly Reports (10Q) from the SEC website.

2024
- 10-K Dec 31
- 10-Q Sep 30
- 10-Q Jun 30
- 10-Q Mar 31
2023
- 10-K Dec 31
- 10-Q Sep 30
- 10-Q Jun 30
- 10-Q Mar 31
2022
- 10-K Dec 31
- 10-Q Sep 30
- 10-Q Jun 30
- 10-Q Mar 31

Sector Comparison

How does Southwest Airlines Co compare to its competitors?

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Peter Lynch's Chart

This chart shows the current pricing of Southwest Airlines Co compared to its past. The addition of the earnings trend line provides further insights into the company's earnings power.

CAGR -10%

Stability 9%

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Southwest Airlines Co Discounted Cash Flow

Fully customizable DCF calculator online for Southwest Airlines Co.

Years

Calculation mode

= -$15B

	0	1	2	3	4	5	6	7	8	9	10	TV
fcf	-$1.6B	-$1.6B	-$1.6B	-$1.5B	-$1.5B	-$1.5B	-$1.5B	-$1.5B	-$1.4B	-$1.4B	-$1.4B	-$14B
DCF		-$1.4B	-$1.3B	-$1.2B	-$1B	-$930M	-$835M	-$750M	-$674M	-$605M	-$543M	-$5.4B
Value	-$15B

Competitiveness and MOAT

High margins render the company resilient under dire circumstances, hence able to drive competitors out or acquire them. ROE and ROA measure the average flow generated by each invested dollar. Their marginal value is a forecast of future growth, and it is considered by Buffett and Munger the most important single indicator.

Years	12/2015	12/2016	12/2017	12/2018	12/2019	12/2020	12/2021	12/2022	12/2023	12/2024	TTM
Net Margins	11%	11%	16%	11%	10%	-34%	6%	-13%	2%	2%	2%
ROA	-	16%	14%	13%	12%	-11%	5%	3%	2%	2%	2%
ROE	-	27%	33%	25%	23%	-35%	9%	-29%	4%	4%	4%

Bad Net Margins (1.69%)

Net Margins are too low to guarantee profitability in case of higher costs or higher interest rates. Furthermore lower margins cause higher earnings’ volatility.

Safety and Stability

Being debt the number one cause of investment losses and company death, the ratio Debt/FCF is of utmost importance to guarantee safety. On the other hand the Graham’s stability measures the drawdown of earnings, hence indicating the reliability of the flow generated by the company.

Years	12/2015	12/2016	12/2017	12/2018	12/2019	12/2020	12/2021	12/2022	12/2023	12/2024	TTM
Debt over FCF	-	1.5	2.03	1.14	0.9	-6.46	6.17	-60.84	-22.62	-5.23	-5.23
Debt over Equity	0.43	0.4	0.35	0.34	0.27	1.19	1.08	0.76	0.77	0.81	0.81
Growth Stability	-	-	-	93%	84%	-112%	100%	-5K%	-	-	-5K%

Good Debt/FCF ratio (-5.23)

Net Margins are high enough to offer a good protection on the profits in case of higher costs or higher interests. Furthermore higher margins reduce earnings’ volatility.

Good Debt/Equity ratio (0.81)

The company is not overleveraged and has a good balance between equity and debt.

Bad Graham’s Stability (-5K%)

The company has a bad stability in its earnings, which is a sign of a bad competitive advantage.

Growth

Growth can be dangerous when forecasting, simply projecting the current growth is in general wrong. A company passes through multiple phases, from being young and unprofitable, to the first periods of profitability and high growth, until it arrives at a period of regime with limited growth. Identifying in which phase the company is in may help forecasting.

Years	12/2015	12/2016	12/2017	12/2018	12/2019	12/2020	12/2021	12/2022	12/2023	12/2024	CAGR 5Y
Revenue YoY growth	-	3%	4%	4%	2%	-60%	75%	51%	10%	5%	23%
Earnings YoY growth	-	3%	55%	-29%	-7%	-234%	-132%	-415%	-115%	0%	1%
Equity YoY growth	-	15%	24%	-6%	-0%	-10%	17%	3%	-2%	-2%	2%
FCF YoY growth	-	88%	-20%	65%	-0%	-155%	-211%	-107%	166%	347%	-1%