NYSE:LUV
$13.21
(3/16 12:43PM)
+1.6%
| Open | $13.01 |
Mkt Cap | $9.7 Billion |
| High | $13.34 |
52Wk High | $13.08 |
| Low | $13.01 |
52Wk Low | $6.02 |
| Volume | 5.3 Million |
Avg Vol 10D | 9.9 Million |
Ockham's Rating/Recommendation Summary
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LUV Revenue
Cash earnings is the most important factor in our analysis, but it goes without saying that if a company cannot produce sales then there is no ability to generate cash flow. By that logic we look very closely at revenue numbers as our second most important factor in valuing a company's stock. We have established reasonable Price to Sales per share ranges based on historical data of the last 10 years. For, LUV the high and low end of the Price to Sales per share ratios are 1.78x and 1.11x respectively.
Notice that LUV's current Price to Sales per share ratio is 0.93x, which is quite a bit below what we consider a normal Price to Sales ratio for this stock. Given normal conditions and a price of $13.00, LUV is 36% below where we would expect to see it. This will beneficially factor into our final analysis of LUV as it is not often that this stock sinks to these levels.
LUV Cash Earnings
As the old saying goes, "Cash is King!" We look at reported Cash Earnings, but the main emphasis of our analysis involves stripping out non-cash events such as depreciation from our cash earnings analysis. This helps us view the cash flows more clearly. Nevertheless, an analysis of Cash Earnings (both reported and otherwise) is absolutely pivotal to assessing a company's value, and currently LUV is below their historical average multiples of Cash Earnings, as calculated by our proprietary analysis. It is incredibly important to understand that for LUV, the current level of Cash Earnings compared to its historical levels helps identify where LUV is in relation to what the investing community was willing to pay for this level of Cash Earnings in the past. With a historical high Cash Earnings per share ratio of 17.09 and a historical low Cash Earnings per share ratio of 10.15, an investor can relate where value becomes optimal.
So what does a Cash Earnings ratio below the historical norm mean for LUV? Generally, LUV's investors have paid slightly higher stock prices for this level of Cash Earnings, which bodes well as a return to historical norms is statistically likely. However, it is never a guarantee that history gives us proper direction, particularly in fluctuating market cycles. So by utilizing a long term view and incorporating other areas of analysis (like Sales, Dividends, and management analysis), each investor can gain a more complete view of LUV. Remember, that the average Cash Earnings level for LUV has been 13.62, so the current Cash Earnings level of 13.54 is a positive in our view, but by no means is it overwhelming.
LUV Dividends
A strong dividend payment history is looked upon as a favorable characteristic on a company’s future and potentially can receive a positive Ockham rating. That being said, we don't require dividend payments for company's whose management has elected to forgo them entirely.
When reviewing dividend yields for LUV, we compare the historic high and low levels over the past, which is similar to our evaluation of Sales and Cash Earnings per share. Paying a dividend is not necessary for any company, but changes in dividend often can lend clues as to the health of the business. A rising dividend is a strong sign for an established company, as it reflects management's confidence in the company. LUV’s estimated annual dividend is $0.02 resulting in a current dividend yield of 0.15%. The highest dividend yield from LUV over recent history was 0.40% while the lowest dividend yield was 0.09%. While it is quite common for a growth stock to pay no dividend at all, but for a mature company such as LUV that has a history of paying dividends it is disappointing to see their dividend yield drop so significantly. At this time, the current dividend yield is 38.78% below the median yield.
Earnings Per Share at LUV Were on the Docket at InBusiness With Margaret Brennan and Francine Lacqua
LUV's earnings per share was discussed on InBusiness With Margaret Brennan and Francine Lacqua which means there is something significant going on. Profits are the metric we pay the most attention to in our methodology.
When taking into account the amount of news coverage each stock normally sees as a percentage of the total, Southwest Airlines Company has actually sunk a bit in comparison to the others. Our sentiment indicator, provided through the Motley Fool CAPS survey, suggests that investors are neutral overall towards LUV and think that it will generally perform in-line with the S&P 500. The Ockham valuation currently has a Fairly Valued stance on LUV because it trades within the price range that we would expect given current market conditions and fundamentals.
“… Number two, SOUTHWEST AIRLINES. They have seen higher passenger traffic and a lot more on-time arrivals. 171% eps jump from analysts. …”
Bloomberg News Mentioned Sentiment on Southwest Airlines Company Recently
Sentiment and investors' opinions on LUV were covered on Bloomberg News recently and RazorWire has captured the news segment.
The Ockham valuation currently has a Fairly Valued stance on LUV because it trades within the price range that we would expect given current market conditions and fundamentals. Our sentiment indicator, provided through the Motley Fool CAPS survey, suggests that investors are neutral overall towards LUV and think that it will generally perform in-line with the S&P 500. In comparison to the other stocks that we follow, Southwest Airlines Company has seen more discussion in relation to its normal ranking among the group. Be aware that the news sources we track are focusing on this stock more often these days.
“… SOUTHWEST AIRLINES canceled 297 flights today and suspended it is forecast to lead 18 inches of snow and it keeps on coming. The revised gdp numbers show an. …”
Analyst Opinion on LUV the Topic for Squawk On The Street
Wall Street analysts can have a huge affect on stocks, and today Squawk On The Street talked about an analysts' opinion in relation to LUV.
Crowd sentiment is neutral from the millions of opinions submitted through Motley Fool CAPS, which suggests most investors on their platform believe Southwest Airlines Company will perform just about the same as the index. As we analyze the results from RazorWire, one thing we do is rank each stock in terms of amount of news coverage. Recently, LUV has been less covered in the news compared to the rest of our universe of stocks. After factoring in the current fundamentals versus their historically normal ranges, we have established a Fairly Valued stance on LUV.
“… SOUTHWEST AIRLINES trading at levels want seen since october '08. The carrier more than doubling since the march low. Philip morris international upgraded the buy from neutral ... …”
LUV News Mentioned on Cavuto Recently
The latest news from Cavuto on LUV is available through Ockham's news analytics platform RazorWire.
Southwest Airlines Company receives our Fairly Valued rating in our latest report because the current price does not seem out of line with the fundamentals. We noticed recently that in comparison to all other stocks we analyze in the news; LUV has received less coverage from the financial media in business television and blogs. The Motley Fool CAPS crowd believes this stock will perform generally in line with the benchmark, or in other words the crowd is neutral.
“… Charles: no celebrity perks on SOUTHWEST AIRLINES. Hollywood director kevin smith kicked off a flight after the airline determined his size was a safety risk. …”
Squawk On The Street: Discussion of LUV's Earnings
The name of the game in business is profit, and we always pay attention for LUV news as it relates to earnings.
As we analyze the results from RazorWire, one thing we do is rank each stock in terms of amount of news coverage. Recently, LUV has been less covered in the news compared to the rest of our universe of stocks. Crowd sentiment is neutral from the millions of opinions submitted through Motley Fool CAPS, which suggests most investors on their platform believe Southwest Airlines Company will perform just about the same as the index. After factoring in the current fundamentals versus their historically normal ranges, we have established a Fairly Valued stance on LUV.
“… SOUTHWEST AIRLINES at a 52-week high. It managed to break out of its funk with all the snow and all the problems. There is some technical resistance in the stock at 11. …”
The Chief Executive of LUV Was Discussed on Fox Business
CEO's are the strategic leaders of their companies, so any mention of them will garner special interest from us.
As we analyze the results from RazorWire, one thing we do is rank each stock in terms of amount of news coverage. Recently, LUV has been less covered in the news compared to the rest of our universe of stocks. Crowd sentiment is neutral from the millions of opinions submitted through Motley Fool CAPS, which suggests most investors on their platform believe Southwest Airlines Company will perform just about the same as the index. After factoring in the current fundamentals versus their historically normal ranges, we have established a Fairly Valued stance on LUV.
“… Friendly skies despite a dip in demand SOUTHWEST AIRLINES fourth-quarter airlines took off above expectations but with the end of the big travel season what is the view from the ... …”
Earnings Discussion for Southwest Airlines Company on The Opening Bell on Fox Business
The name of the game in business is profit, and we always pay attention for LUV news as it relates to earnings.
Southwest Airlines Company receives our Fairly Valued rating in our latest report because the current price does not seem out of line with the fundamentals. The Motley Fool CAPS crowd believes this stock will perform generally in line with the benchmark, or in other words the crowd is neutral. We noticed recently that in comparison to all other stocks we analyze in the news; LUV has received less coverage from the financial media in business television and blogs.
“… SOUTHWEST AIRLINES, this airlines all right, they don't charge for bags. And strong earnings out this morning and one thing is interesting, the company says it's not going to ... …”
LUV Gets Mentioned in the Financial Media
As always, the latest news on LUV is available to Ockham clients through RazorWire, and it was mentioned recently on Cavuto.
In comparison to the other stocks that we follow, Southwest Airlines Company has seen more discussion in relation to its normal ranking among the group. Be aware that the news sources we track are focusing on this stock more often these days. Our sentiment indicator, provided through the Motley Fool CAPS survey, suggests that investors are neutral overall towards LUV and think that it will generally perform in-line with the S&P 500. The Ockham valuation currently has a Fairly Valued stance on LUV because it trades within the price range that we would expect given current market conditions and fundamentals.
“… The former head of SOUTHWEST AIRLINES and what the industry has to do to make sure they do. Howard putnam, good to have you. What do you tell your folks? …”
Countdown to the Closing Bell: Get Plugged into LUV News Regarding The CEO
CEO's are the strategic leaders of their companies, so any mention of them will garner special interest from us.
We noticed recently that in comparison to all other stocks we analyze in the news; LUV has received less coverage from the financial media in business television and blogs. The Motley Fool CAPS crowd believes this stock will perform generally in line with the benchmark, or in other words the crowd is neutral. Due to deterioration in our valuation, we downgraded LUV as of Saturday, December 12, 2009. Southwest Airlines Company receives our Fairly Valued rating in our latest report because the current price does not seem out of line with the fundamentals.
“… Game plans, SOUTHWEST AIRLINES, ceo gary kelly declaring the company is on the lookout for any growth opportunities like buying another carrier and shares hitting a 52-week high. …”
News on LUV From the Pundits on Squawk Box
News has broken via the television and viral blogs regarding LUV, so investors should take an interest in learning what was said.
As we analyze the results from RazorWire, one thing we do is rank each stock in terms of amount of news coverage. Recently, LUV has been less covered in the news compared to the rest of our universe of stocks. Check the news on this stock because there is a catalyst that has allowed this stock to advance 6.44% today. Crowd sentiment is neutral from the millions of opinions submitted through Motley Fool CAPS, which suggests most investors on their platform believe Southwest Airlines Company will perform just about the same as the index. We consider LUV as Undervalued at the current price of $10.75. According to our methodology, this stock has appreciation potential based on current fundamentals which only improves if earnings or revenue surprise.
“… SOUTHWEST AIRLINES tops a new list of the 50 best places to work as compiled by jobs last year's number one was foodmaker general mills, this year slipping to number two. > > > …”