Airlines’ Relative Valuation after 3Q17 Earnings: What Is Priced In?
Southwest Airlines (LUV) currently has the highest forward EV-to-EBITDA multiple of 6.9x among its peers.
Of the 18 analysts tracking Delta Air Lines (DAL), 100% have a “buy” rating on the stock.
So far in 4Q17, ALK has declined 12.9%, UAL has fallen 4.4%, LUV has fallen 2.3%, and AAL has declined 0.2%.
For 3Q17, Spirit Airlines’ (SAVE) revenues grew 10.6% year-over-year to $687.2 million, beating analysts’ estimates of $687.1 million in revenues.
For 3Q17, JetBlue Airways’ (JBLU) revenues grew 4.6% year-over-year to $1.8 billion, in line with analyst estimates for the quarter.
Southwest Airlines’ (LUV) 3Q17 revenues grew 2.5% year-over-year to $5.3 billion, missing analyst estimates of $5.7 billion in revenues.
ALK’s 3Q17 net income fell 3.9% YoY to $266.0 million, leading to earnings per share (or EPS) of $2.24 and missing analysts’ estimates of $2.26 per share.
American Airlines (AAL) posted 3Q17 revenues of $10.9 billion, in line with analysts’ estimates for the quarter.
UAL’s capacity for the quarter rose 3% YoY to ~70.1 billion miles.
Delta Air Lines (DAL) kicked off the 3Q17 results season for airlines on October 11, 2017. Its revenues rose 5.5% year-over-year to $11.1 billion.
Southwest Airlines (LUV) has a forward EV-to-EBITDA1 multiple of 7.1x. This is the highest multiple among the major airline carriers and is higher than its average valuation of 6.3x since…
Of the 17 analysts tracking Southwest Airlines (LUV), 36.8% of the analysts (seven analysts) gave a “strong buy” rating on the stock, while another 47.4% (nine analysts) gave a “buy”…
For fiscal 2018, LUV’s improving unit revenue environment is expected to increase revenue growth to 5.9% YoY to $22.4 billion.
LUV’s cash dividend ratio stood at 5.2x at the end of 3Q17, indicating its ability to sustain dividend payouts.
Southwest Airlines ended 3Q17 with ~$3.0 billion in cash on its balance sheet.
Southwest Airlines’ fuel costs rose 10.1% year-over-year to $1.96 per gallon.
Southwest Airlines’ average airfares declined 2.2% year-over-year to $143.70 in 3Q17, and they fell 1.0% YoY in the first nine months to $149.20.
Southwest Airlines’ (LUV) 3Q17 capacity grew 3.1% year-over-year to ~39.1 billion miles.
Southwest Airlines (LUV) reported its 3Q17 earnings on October 26. LUV missed its consensus estimates for revenues while beating its estimates for earnings per share.
American Airlines’ 12-month target price is $56.40 versus $58.50 after its 2Q17 earnings results.