Finance Analysis Southwest Airlines

Finance Analysis Southwest Airlines


Optimal investment involves carrying out effective analysis of various investment opportunities and selecting one with a higher return at a low risk. Evaluating the investment opportunity involves analyzing the intrinsic security value and other external factors that affect the company. When composing an investment portfolio an investor considers securities and investment vehicles that will meet his/her objectives. While evaluating the stock of the company some of the factors considered include peer performance, historical performance, risk, and fundamental factors. Evaluating these factors reveals the risk-and-return of the potential investment. This report aims at evaluating two companies operating in the same industry with a view to selecting the company that will offer the best investment return for considerably the same level of risk. The two companies, Southwest Airlines and American Airlines operate in the air travel industry. The report commences by looking at the background information about the two companies.

Background to the Companies

  1. Southwest Airlines

This is a main airline in U.S. and serves as the world largest low-carrier. The company was founded in 1967 and has it’s headquartered in Dallas, Texas. Southwest Airlines employs over 46, 000 people and operates more than 3, 800 flights every day. As at June 2016, Southwest Airlines had 98 destinations located in 40 states and a fleet size of 722 airplanes. By 2015, the company had total assets valued at US $ 21.31 billion, and total equity valued at US $ 7.36 billion. In the same year, Southwest Airlines generated US$ 19.82 billion in the form of revenue and operating income amounting to US 4 4.12 billion (Airlines & Roadway, 2014). The company is listed on the New York Stock Exc……………………..

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