Why Southwest Airlines Co (NYSE:LUV) Is An Attractive Investment
As an investor, I look for investments which does not compromise one fundamental factor for another. By this I mean, I look at stocks holistically, from their financial health to their future outlook. In the case of Southwest Airlines Co (NYSE:LUV), it is a financially-healthy , dividend-paying company with a a strong track record of performance. Below is a brief commentary on these key aspects. If you’re interested in understanding beyond my high-level commentary, read the full report on Southwest Airlines here.
Solid track record with adequate balance sheet and pays a dividend
LUV delivered a bottom-line expansion of 74.49% in the prior year, with its most recent earnings level surpassing its average level over the last five years. The strong earnings growth is reflected in impressive double-digit 37.55% return to shareholders, which is an optimistic signal for the future. With a debt-to-equity ratio of 37.59%, LUV’s debt level is reasonable. This means that LUV’s capital structure strikes a good balance between low-cost debt funding and maintaining financial flexibility without overly restrictive terms of debt. LUV’s has produced operating cash levels of 0.91x total debt over the past year, which implies that LUV’s management has put its borrowings into good use by generating enough cash to cover a sufficient portion of borrowings.
Income investors would also be happy to know that LUV is a great dividend company, with a current yield standing at 1.24%. LUV has also been regularly increasing its dividend payments to shareholders over the past decade.
Next Steps:
For Southwest Airlines, I’ve compiled three essential aspects you should further examine:
Future Outlook: What are well-informed industry analysts predicting for LUV’s future growth? Take a look at our free research report of analyst consensus for LUV’s outlook.
Valuation: What is LUV worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether LUV is currently mispriced by the market.
Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of LUV? Explore our interactive list of stocks with large potential to get an idea of what else is out there you may be missing!
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
