LUV - Embedded Expectations Analysis - 2019 06 19
Southwest Airlines Co. (LUV:USA) currently trades at historical lows relative to UAFRS-based (Uniform) Earnings, with a 15.5x Uniform P/E, implying bearish expectations for the firm. Also, management may have concerns about increased depreciation and amortization, operational initiatives, and sales growth.Specifically, management is confident about their reputation for high-efficiency and low-cost operations, as well as their recent performance. However, management may be concerned with cost increases due to depreciation and amortization, as well as concerns about fuel efficiency. They may also be overstating the potential of uncertified operations, and may have concerns about the effectiveness of inspection techniques. Additionally, they may lack confidence in their ability to achieve earnings expectations, and may lack confidence in the sustainability of their daily flight volume. Finally, they may be overstating the capabilities of O&D revenue management and the sales growth of their new credit card.
Southwest Airlines operates Southwest Airlines, a passenger airline that provides scheduled air transportation in the United States and near-international markets. The company has Boeing 737 aircraft in its fleet and serves destinations in various states, the District of Columbia, the Commonwealth of Puerto Rico, and other near-international countries such as Mexico, Jamaica, The Bahamas, Aruba, Dominican Republic, Costa Rica, Belize, Cuba, the Cayman Islands, and Turks and Caicos. The company principally provides point-to-point service, which allows for direct nonstop routing. The company also provides a suite of digital platforms to support Customers' needs prior to and during the course of their travel.
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