American Airlines Group Inc. (AAL) vs Southwest Airlines Co. (LUV)

American Airlines Group Inc. and Southwest Airlines Co. are both Airlines companies. Southwest Airlines Co. is the larger, with a market value of $20.5B against $9.0B — 2.3× the size. American Airlines Group Inc. has negative trailing earnings, so its P/E is not meaningful; Southwest Airlines Co. trades at 25.7×. Southwest Airlines Co. grew revenue faster over the last twelve months: 9.46% against 7.53%. Southwest Airlines Co. has the higher net margin (2.79% vs −0.56%) and the higher return on invested capital (7.04% vs 3.82%). Across the 18 metrics below, Southwest Airlines Co. leads on 11 and American Airlines Group Inc. on 7.

Valuation

Metric AAL LUV Airlines median
P/E n/m 25.71 10.32
P/S 0.16 0.69 0.57
P/B n/m 2.95 2.06
Price to free cash flow 32.23 n/m 13.20
EV/EBITDA 29.43 8.84 9.68
EV/Sales 0.51 0.77 0.89
Earnings yield (3.53%) 3.89% 2.85%
Free cash flow yield 3.10% (0.03%) 3.17%

Profitability

Metric AAL LUV Airlines median
Gross margin 21.11% 23.23% 42.57%
Operating margin 1.73% 3.46% 4.18%
Net margin (0.56%) 2.79% 1.85%
Free cash flow margin 0.49% (0.02%) 4.31%
Return on equity 8.31% 11.11% 10.75%
Return on assets (0.51%) 2.85% 1.67%
Return on invested capital 3.82% 7.04% 3.19%

Growth

Metric AAL LUV Airlines median
Revenue growth (TTM) 7.53% 9.46% 9.79%
EPS growth (last fiscal year) (86.29%) 3.95% —
Revenue growth, 5-year CAGR 25.80% 25.41% 25.83%
Net income growth, 5-year CAGR 0.00% 0.00% 0.00%

Health

Metric AAL LUV Airlines median
Debt to equity (7.28) 0.84 0.81
Current ratio 0.53 0.49 0.60
Net debt to EBITDA 6.09 0.84 1.42

Dividend

Metric AAL LUV Airlines median
Dividend yield — 2.28% 0.82%
Payout ratio 0.00 0.57 0.00

Size

Metric AAL LUV Airlines median
Market cap 8.95b 20.53b 3.91b

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