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October 15, 2014

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VALUATION WATCH IS OFF: Undervalued stocks now make up 59.35% of our stocks assigned a valuation and 21.84% of those equities are calculated to be undervalued by 20% or more.  Eleven sectors are calculated to be undervalued--three by double digits.

Still Lots of LUV

--Future Looks Bright for Southwest, ValuEngine Continues STRONG BUY Rating

Southwest Airlines (LUV) is a major domestic airline that provides primarily short haul, high-frequency, point-to-point, low-fare service. Southwest operates over Boeing 737 aircraft in numerous cities. Southwest has the lowest operating cost structure in the domestic airline industry and consistently offers the lowest and simplest fares. Southwest also has one of the best overall Customer Service records.

Southwest has long been a favorite among budget-minded travelers even though it has recently transformed itself into a powerhouse of a domestic--and now, international--carrier. The airline made some very shrewd moves in the past to shield itself from volatility in the fuel market by hedging purchases and it also remains one of the last carriers to eschew baggage fees, rebooking fees, and many of the other "revenue enhancements" which are the bane of air travel these days.

The company has also branched out into the international market of late because the latest model Boeing 737 has the range to reach a variety of destinations in the Caribbean and Mexico. And, the elimination of the Wright Amendment, which forced the carrier to use Love Field in Dallas in lieu of DFW Airport, has finally been retired.

Our models remain quite impressed by Southwest, and ValuEngine continues its STRONG BUY recommendation on Southwest Airlines for 2014-10-14. Based on the information we have gathered and our resulting research, we feel that Southwest Airlines has the probability to OUTPERFORM average market performance for the next year. The company exhibits ATTRACTIVE Momentum and Company Size.

Below is today's data on LUV:


ValuEngine Forecast
 
Target
Price*
Expected
Return
1-Month
 30.30 1.01%
3-Month
 30.91 3.05%
6-Month
 31.99 6.63%
1-Year
 33.62 12.08%
2-Year
 37.84 26.12%
3-Year
 18.18 -39.40%

Valuation & Rankings
Valuation
9.13% undervalued
Valuation Rank(?)
 62
1-M Forecast Return
1.01%
1-M Forecast Return Rank
 98
12-M Return
95.95%
Momentum Rank(?)
 97
Sharpe Ratio
0.90
Sharpe Ratio Rank(?)
 93
5-Y Avg Annual Return
25.16%
5-Y Avg Annual Rtn Rank
 93
Volatility
28.02%
Volatility Rank(?)
 67
Expected EPS Growth
27.17%
EPS Growth Rank(?)
 57
Market Cap (billions)
20.76
Size Rank
 95
Trailing P/E Ratio
17.34
Trailing P/E Rank(?)
 64
Forward P/E Ratio
13.64
Forward P/E Ratio Rank
 57
PEG Ratio
0.64
PEG Ratio Rank
 51
Price/Sales
1.14
Price/Sales Rank(?)
 62
Market/Book
3.17
Market/Book Rank(?)
 35
Beta
1.06
Beta Rank
 49
Alpha
0.67
Alpha Rank
 97

 

ValuEngine Market Overview

Summary of VE Stock Universe
Stocks Undervalued
59.35%
Stocks Overvalued
40.65%
Stocks Undervalued by 20%
21.84%
Stocks Overvalued by 20%
10.11%

ValuEngine Sector Overview

Sector
Change
MTD
YTD
Valuation
Last 12-MReturn
P/E Ratio
0.49%
-1.57%
-1.44%
3.57% overvalued
5.70%
22.89
0.93%
-1.16%
0.68%
1.40% overvalued
2.52%
16.90
1.18%
-2.82%
1.92%
0.26% overvalued
3.93%
20.25
1.61%
-2.69%
-9.07%
0.19% overvalued
-4.88%
22.72
0.12%
-2.83%
5.54%
0.17% overvalued
8.27%
27.82
1.07%
-4.02%
-4.53%
0.56% undervalued
-1.50%
20.15
0.57%
-3.65%
-8.67%
0.95% undervalued
-0.34%
25.56
0.73%
-5.28%
-6.71%
2.45% undervalued
11.32%
19.40
0.71%
-3.29%
-5.59%
3.64% undervalued
5.04%
23.31
0.80%
-7.39%
-5.17%
3.92% undervalued
-2.44%
28.86
1.03%
-6.05%
-1.64%
4.48% undervalued
2.44%
18.51
1.24%
-5.01%
-9.28%
7.73% undervalued
-1.91%
21.13
0.65%
-6.91%
-8.01%
9.70% undervalued
-6.60%
14.88
1.35%
-4.04%
-7.43%
13.24% undervalued
-0.44%
22.16
-0.65%
-13.69%
-1.93%
15.92% undervalued
-9.77%
22.54
1.91%
-5.30%
-5.67%
15.97% undervalued
-7.80%
24.26

 

 

 

 

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