Fact based stock research
Southwest Airlines (NYSE:LUV)

US8447411088

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For every stock, we judge its performance against its peers and rank it on a scale of 1 to 100. The higher the rank, the better the stock performs than its peers. And, we do this for six investment strategies:
Value - shows how good of a value the stock is. Green is "inexpensive"; red is "expensive".

Growth - shows a company's growth potential. Green is "high growth" expected; red is "tough times ahead".

Safety - relates to the amount of debt a company has. Green is low debt level; red is high debt level.

Combined Financial - this isn't an average of the first three ranks but rather a consolidated view across several financial indicators. Green = good; red = tread carefully.

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Southwest Airlines stock research in summary

southwest.com

ANALYSIS: With an Obermatt Combined Rank of 46 (worse than 54% compared with investment alternatives), Southwest Airlines (Airlines, USA) shares have somewhat below-average financial characteristics compared with similar stocks. Shares of Southwest Airlines are a good value (attractively priced) with a consolidated Value Rank of 66 (better than 66% of alternatives) but show below-average growth (Growth Rank of 46), and are riskily financed (Safety Rank of 33), which means above-average debt burdens. ...read more

RECOMMENDATION: A Combined Rank of 46, is a hold recommendation based on Southwest Airlines's financial characteristics. As the company Southwest Airlines's key financial metrics exhibit good value (Obermatt Value Rank of 66) but low growth (Obermatt Growth Rank of 46) and risky financing practices (Obermatt Safety Rank of 33), it may be a risky investment, because debt in times of crises can make things worse. The good value, better than 66% of comparable companies, may indicate the company's future is challenging. If you believe that low growth is temporary or just due to a specific current event, you may conclude that the good value of the stock provides an attractive investment opportunity. Obermatt Premium subscribers can further check the stock’s Sentiment Ranks, which also flow into the Obermatt 360° View for investors. ...read more

Latest Obermatt Ranks


360° View^new
Sentiment Rank^new
Value Rank	66
Growth Rank	46
Safety Rank	33
Combined Rank	46

Country	USA
Industry	Airlines
Index	Dividends USA, S&P 500
Size class	XX-Large

19-Dec-2024. Stock data may be delayed. Log in or sign up to get the most recent research.

Further information

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Review the performance ranks of the individual metrics that form each investment strategy.

Research History: Southwest Airlines

RESEARCH HISTORY	2021	2022	2023	2024
VALUE
VALUE	12	47	59	66
GROWTH
GROWTH	61	48	61	46
SAFETY
SAFETY	20	59	63	33
SENTIMENT
SENTIMENT	n/a	19	24	^new
360° VIEW
360° VIEW	n/a	26	41	^new

Most recent update of the stock research: 19-Dec-2024. Financial reporting date used for calculating ranks: 30-Sep-2024. Stock research history is based on the Obermatt Method. The higher the rank, the better Southwest Airlines is in the corresponding investment strategy.
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Combined financial peformance in Detail

RESEARCH HISTORY	2021	2022	2023	2024
VALUE
VALUE	12	47	59	66
GROWTH
GROWTH	61	48	61	46
SAFETY
SAFETY	20	59	63	33
COMBINED
COMBINED	17	45	81	46

Last update of combined financial performance: 19-Dec-2024. Stock analysis on combined financial performance: The higher the rank of Southwest Airlines the better the performance.

Value Metrics in Detail

ANALYSIS: With an Obermatt Value Rank of 66 (better than 66% compared with alternatives), Southwest Airlines shares are more attractively priced than the majority of comparable stocks. The Value Rank is based on consolidating four value indicators, where three out of four indicators are above average for Southwest Airlines. Price-to-Sales (P/S) is 59 which means that the stock price compared with what market professionals expect for future sales is lower than for 59% of comparable companies, indicating a good value for Southwest Airlines's revenue size. The same is valid for the Price-to-Book Capital ratio (also referred to as market-to-book ratio) with a Price-to-Capital Rank of 59. Finally, compared with other companies in the same industry, dividend yields of Southwest Airlines are expected to be higher than for 78% of all competitors (a Dividend Yield rank of 78). The only low rank is for expected profits with a Price-to-Profit Rank of 35, indicating that the market expects the company's profit to be low despite a high dividend. ...read more

RECOMMENDATION: The overall picture with a consolidated Value Rank of 66, is a buy recommendation based on Southwest Airlines's stock price compared with the company's operational size and dividend yields. The low Profit Rank could result from a one-off charge, for instance, for an accident, a legal settlement, or a restructuring project. If the company keeps its dividends high, the low expected profit may be transitory. If that is the case, the three good value ranks for Sales, Capital, and Dividends are reliable indicators for good stock price value, a low stock price. We recommend further analyzing the stock with Obermatt’s Value, Safety, and Sentiment Ranks, including the 360° View, before making an investment decision. ...read more

VALUE METRICS	2021	2022	2023	2024
PRICE VS. REVENUES (P/S)
PRICE VS. REVENUES (P/S)	43	40	49	59
PRICE VS. PROFITS (P/E)
PRICE VS. PROFITS (P/E)	26	20	34	35
PRICE VS. CAPITAL (Market-to-Book)
PRICE VS. CAPITAL (Market-to-Book)	43	44	53	59
DIVIDEND YIELD
DIVIDEND YIELD	1	82	82	78
CONSOLIDATED RANK: VALUE
CONSOLIDATED RANK: VALUE	12	47	59	66

Last update of Value Rank: 19-Dec-2024. Stock analysis on value ratios: The higher the rank, the lower the value ratio of Southwest Airlines; except for dividend yield where the rank is higher, the higher the yield.

Growth Metrics in Detail

ANALYSIS: With an Obermatt Growth Rank of 46 (better than 46% compared with alternatives), Southwest Airlines shows a below-average growth dynamic in its industry. There is limited momentum in this company. The Growth Rank is based on consolidating four value indicators, with all but one indicator above average for Southwest Airlines. Sales Growth has a rank of 54 which means that currently, professionals expect the company to grow more than 54% of its competitors. Capital Growth is also above 23% of competitors with a rank of 56, and Stock Returns with the rank of 56 is also an outperformance. Only Profit Growth is low with a rank of 23 which means that currently, professionals expect the company to grow its profits less than 77% of its competitors. ...read more

RECOMMENDATION: The overall picture with a consolidated Growth Rank of 46, is a hold recommendation for growth and momentum investors. All three operating growth indicators, namely revenue, profit, and capital growth, are showing improvements. This is a good indication of a company with a positive future. That might, at the same time, be the simple reason why profit growth is low. A growing company needs money and thus can't yet show high profit growth. Look out for signs in corporate communication about extra growth efforts costing time and money. If that is the case, Southwest Airlines is a good growth stock. While momentum is a popular investment factor, the value aspect might be the more important one, in the longer term. We recommend analyzing the stock with Obermatt’s Value, Safety, and Sentiment Ranks to arrive at a 360° View of the stock purchase case. ...read more

GROWTH METRICS	2021	2022	2023	2024
REVENUE GROWTH
REVENUE GROWTH	22	82	61	54
PROFIT GROWTH
PROFIT GROWTH	40	53	75	23
CAPITAL GROWTH
CAPITAL GROWTH	n/a	47	61	56
STOCK RETURNS
STOCK RETURNS	69	27	15	56
CONSOLIDATED RANK: GROWTH
CONSOLIDATED RANK: GROWTH	61	48	61	46

Last update of Growth Rank: 19-Dec-2024. Stock analysis on growth metrics: The higher the rank, the higher the growth and returns of Southwest Airlines.

Safety Metrics in Detail

ANALYSIS: With an Obermatt Safety Rank of 33 (better than 33% compared with alternatives), the company Southwest Airlines has financing practices on the riskier side, which means that their overall debt burden is above the industry average. This doesn't mean that the business of Southwest Airlines is also risky, it only means that the company is on the riskier side in respect to bankruptcy in case things turn sour, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators, with just one indicator above average for Southwest Airlines and the other two below average. Leverage is at a rank of 61 meaning the company has a below-average debt-to-equity ratio. It has less debt than 61% of its competitors.Refinancing is at a rank of 30, which means that the portion of the debt about to be refinanced is above-average. It has more debt in the refinancing stage than 70% of its competitors. Liquidity is at a rank of 23, meaning that the company generates less profit to service its debt than 77% of its competitors. ...read more

RECOMMENDATION: With a consolidated Safety Rank of 33 (worse than 67% compared with alternatives), Southwest Airlines has a financing structure that is riskier than that of its competitors. This is an indication that the company is on the riskier side when it comes to debt service. There is only below-market average liquidity, and a short-term refinancing issue might be around the corner. But in the long-term, the debt levels of Southwest Airlines are on the safer side. Investors may have a short-term debt challenge and liquidity issues with Southwest Airlines and should also compare Obermatt’s Value, Growth, and Sentiment Ranks before making a decision. ...read more

SAFETY METRICS	2021	2022	2023	2024
LEVERAGE
LEVERAGE	92	50	58	61
REFINANCING
REFINANCING	14	84	84	30
LIQUIDITY
LIQUIDITY	1	10	41	23
CONSOLIDATED RANK: SAFETY
CONSOLIDATED RANK: SAFETY	20	59	63	33

Last update of Safety Rank: 19-Dec-2024. Stock analysis on safety metrics: The higher the rank, the lower the leverage of Southwest Airlines and the more cash is available to service its debt.

Sentiment Metrics in Detail

SENTIMENT	2021	2022	2023	2024
ANALYST OPINIONS
ANALYST OPINIONS	n/a	53	15	^new
OPINIONS CHANGE
OPINIONS CHANGE	n/a	3	46	^new
PRO HOLDINGS
PRO HOLDINGS	n/a	53	39	^new
MARKET PULSE
MARKET PULSE	n/a	42	52	^new
CONSOLIDATED RANK: SENTIMENT
CONSOLIDATED RANK: SENTIMENT	n/a	19	24	^new

Last update of Sentiment Rank: 19-Dec-2024. Stock analysis on sentiment metrics: The higher the rank, the more positive the sentiment for Southwest Airlines.
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