Can Southwest Airlines Outperform Against Economic Headwinds?

The company’s quarter-over-quarter performance over the last five periods is also slightly unattractive. Southwest did post a 15.6 percent revenue jump in the June (second) quarter, but was slightly worse off in September of 2012 than in 2011.

Year-over-year earnings for the third quarter were a solid beat, if still barely positive. Third-quarter net income was heavily impacted by $81 million in unfavorable special items, without which earnings would have been $0.13 per diluted share.

E = Excellent Poor Performance Relative to Peers

Many investors favor return on equity as a key metric to diagnose how well a company is performing. Unfortunately, Southwest’s operational performance compares unfavorably to its competitors. LUV has an ROE of 7.34 percent, compared to Delta Air Lines Inc. (NYSE:DAL) with an ROE currently at a whopping 234.27 percent, and JetBlue Airways Corporation (NASDAQ:JBLU), which has an ROE of 8.31 percent.

Operating margins are also critical for stock evaluation. On this metric, Southwest stacks up unfavorably to its competitors with a margin of 3.99 percent. This compares to Delta with a margin of 6.88 percent, and JetBlue with a margin of 8.41 percent.

However, Southwest’s low margins are indicative of its status as a low-cost carrier…