SOUTHWEST AIRLINES CO (LUV) Fundamental Analysis & Valuation

NYSE:LUV • US8447411088

Current stock price

41.35 USD
+1.94 (+4.92%)
Last:

This LUV fundamental analysis includes valuation metrics, fair value assessment, financial health analysis, profitability trends, growth metrics and dividend sustainability analysis.

6

1. LUV Profitability Analysis

1.1 Basic Checks

  • In the past year LUV was profitable.
  • In the past year LUV had a positive cash flow from operations.
  • Each year in the past 5 years LUV has been profitable.
  • Each year in the past 5 years LUV had a positive operating cash flow.
LUV Yearly Net Income VS EBIT VS OCF VS FCFLUV Yearly Net Income VS EBIT VS OCF VS FCFYearly Net Income VS EBIT VS OCF VS FCF 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 0 2B -2B 4B -4B

1.2 Ratios

  • LUV has a Return On Assets of 1.52%. This is in the better half of the industry: LUV outperforms 63.64% of its industry peers.
  • LUV has a Return On Equity of 5.53%. This is in the better half of the industry: LUV outperforms 63.64% of its industry peers.
  • Looking at the Return On Invested Capital, with a value of 1.84%, LUV is in line with its industry, outperforming 45.45% of the companies in the same industry.
  • The Average Return On Invested Capital over the past 3 years for LUV is significantly below the industry average of 20.69%.
  • The last Return On Invested Capital (1.84%) for LUV is above the 3 year average (1.36%), which is a sign of increasing profitability.
Industry RankSector Rank
ROA 1.52%
ROE 5.53%
ROIC 1.84%
ROA(3y)1.39%
ROA(5y)1.68%
ROE(3y)4.81%
ROE(5y)5.77%
ROIC(3y)1.36%
ROIC(5y)N/A
LUV Yearly ROA, ROE, ROICLUV Yearly ROA, ROE, ROICYearly ROA, ROE, ROIC 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 0 20 -20

1.3 Margins

  • Looking at the Profit Margin, with a value of 1.57%, LUV is in the better half of the industry, outperforming 63.64% of the companies in the same industry.
  • In the last couple of years the Profit Margin of LUV has declined.
  • Looking at the Operating Margin, with a value of 1.53%, LUV is in line with its industry, outperforming 45.45% of the companies in the same industry.
  • In the last couple of years the Operating Margin of LUV has declined.
  • LUV has a better Gross Margin (73.57%) than 100.00% of its industry peers.
  • LUV's Gross Margin has improved in the last couple of years.
Industry RankSector Rank
OM 1.53%
PM (TTM) 1.57%
GM 73.57%
OM growth 3Y-29.69%
OM growth 5YN/A
PM growth 3Y-11.45%
PM growth 5YN/A
GM growth 3Y2.37%
GM growth 5Y2.24%
LUV Yearly Profit, Operating, Gross MarginsLUV Yearly Profit, Operating, Gross MarginsYearly Profit, Operating, Gross Margins 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 0 20 -20 40 -40 60

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4

2. LUV Health Analysis

2.1 Basic Checks

  • With a Return on Invested Capital (ROIC) below the Cost of Capital (WACC), LUV is destroying value.
  • Compared to 1 year ago, LUV has less shares outstanding
  • LUV has less shares outstanding than it did 5 years ago.
  • The debt/assets ratio for LUV has been reduced compared to a year ago.
LUV Yearly Shares OutstandingLUV Yearly Shares OutstandingYearly Shares Outstanding 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 200M 400M 600M
LUV Yearly Total Debt VS Total AssetsLUV Yearly Total Debt VS Total AssetsYearly Total Debt VS Total Assets 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 10B 20B 30B

2.2 Solvency

  • LUV has an Altman-Z score of 2.14. This is not the best score and indicates that LUV is in the grey zone with still only limited risk for bankruptcy at the moment.
  • LUV has a better Altman-Z score (2.14) than 86.36% of its industry peers.
  • A Debt/Equity ratio of 0.57 indicates that LUV is somewhat dependend on debt financing.
  • With an excellent Debt to Equity ratio value of 0.57, LUV belongs to the best of the industry, outperforming 90.91% of the companies in the same industry.
Industry RankSector Rank
Debt/Equity 0.57
Debt/FCF N/A
Altman-Z 2.14
ROIC/WACC0.2
WACC9.08%
LUV Yearly LT Debt VS Equity VS FCFLUV Yearly LT Debt VS Equity VS FCFYearly LT Debt VS Equity VS FCF 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 0 2B 4B 6B 8B 10B

2.3 Liquidity

  • A Current Ratio of 0.52 indicates that LUV may have some problems paying its short term obligations.
  • Looking at the Current ratio, with a value of 0.52, LUV is in line with its industry, outperforming 40.91% of the companies in the same industry.
  • A Quick Ratio of 0.45 indicates that LUV may have some problems paying its short term obligations.
  • LUV has a Quick ratio of 0.45. This is comparable to the rest of the industry: LUV outperforms 40.91% of its industry peers.
Industry RankSector Rank
Current Ratio 0.52
Quick Ratio 0.45
LUV Yearly Current Assets VS Current LiabilitesLUV Yearly Current Assets VS Current LiabilitesYearly Current Assets VS Current Liabilites 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 5B 10B 15B

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WACCDebt/EquityHow to determine the health of a companyAltman-Z scoreShow peers with great health

5

3. LUV Growth Analysis

3.1 Past

  • LUV shows a small growth in Earnings Per Share. In the last year, the EPS has grown by 6.45%.
  • The Earnings Per Share has been decreasing by -3.45% on average over the past years.
  • LUV shows a small growth in Revenue. In the last year, the Revenue has grown by 2.11%.
  • Measured over the past years, LUV shows a very strong growth in Revenue. The Revenue has been growing by 25.41% on average per year.
EPS 1Y (TTM)6.45%
EPS 3Y-3.45%
EPS 5YN/A
EPS Q2Q%3.57%
Revenue 1Y (TTM)2.11%
Revenue growth 3Y5.63%
Revenue growth 5Y25.41%
Sales Q2Q%5.61%

3.2 Future

  • The Earnings Per Share is expected to grow by 47.38% on average over the next years. This is a very strong growth
  • Based on estimates for the next years, LUV will show a small growth in Revenue. The Revenue will grow by 6.37% on average per year.
EPS Next Y342.07%
EPS Next 2Y129.51%
EPS Next 3Y79.06%
EPS Next 5Y47.38%
Revenue Next Year13.42%
Revenue Next 2Y8.94%
Revenue Next 3Y7.25%
Revenue Next 5Y6.37%

3.3 Evolution

  • When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
  • The Revenue growth rate is decreasing: in the next years the growth will be less than in the last years.
LUV Yearly Revenue VS EstimatesLUV Yearly Revenue VS EstimatesYearly Revenue VS Estimates 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 10B 20B 30B
LUV Yearly EPS VS EstimatesLUV Yearly EPS VS EstimatesYearly EPS VS Estimates 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 0 2 -2 4 -4 6 -6

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5

4. LUV Valuation Analysis

4.1 Price/Earnings Ratio

  • With a Price/Earnings ratio of 41.77, LUV can be considered very expensive at the moment.
  • LUV's Price/Earnings ratio is in line with the industry average.
  • Compared to an average S&P500 Price/Earnings ratio of 25.23, LUV is valued quite expensively.
  • With a Price/Forward Earnings ratio of 9.45, the valuation of LUV can be described as very reasonable.
  • LUV's Price/Forward Earnings ratio is a bit cheaper when compared to the industry. LUV is cheaper than 72.73% of the companies in the same industry.
  • When comparing the Price/Forward Earnings ratio of LUV to the average of the S&P500 Index (22.42), we can say LUV is valued rather cheaply.
Industry RankSector Rank
PE 41.77
Fwd PE 9.45
LUV Price Earnings VS Forward Price EarningsLUV Price Earnings VS Forward Price Earnings ChartPrice Earnings - Forward Price Earnings PE FPE 10 20 30 40

4.2 Price Multiples

  • LUV's Enterprise Value to EBITDA is on the same level as the industry average.
Industry RankSector Rank
P/FCF N/A
EV/EBITDA 10.58
LUV Per share dataLUV EPS, Sales, OCF, FCF, BookValue per sharePer Share Data Per Share 0 10 20 30 40 50

4.3 Compensation for Growth

  • LUV's low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
  • The decent profitability rating of LUV may justify a higher PE ratio.
  • A more expensive valuation may be justified as LUV's earnings are expected to grow with 79.06% in the coming years.
PEG (NY)0.12
PEG (5Y)N/A
EPS Next 2Y129.51%
EPS Next 3Y79.06%

More info and screens

Price/EarningsPrice/FCFFCF per shareEV/EBITDAPEG RATIOShow best valued peers

5

5. LUV Dividend Analysis

5.1 Amount

  • LUV has a Yearly Dividend Yield of 1.76%.
  • Compared to an average industry Dividend Yield of 0.98, LUV pays a better dividend. On top of this LUV pays more dividend than 81.82% of the companies listed in the same industry.
  • Compared to an average S&P500 Dividend Yield of 1.89, LUV has a dividend comparable with the average S&P500 company.
Industry RankSector Rank
Dividend Yield 1.76%

5.2 History

  • On average, the dividend of LUV grows each year by 16.25%, which is quite nice.
  • LUV has been paying a dividend for at least 10 years, so it has a reliable track record.
Dividend Growth(5Y)16.25%
Div Incr Years0
Div Non Decr Years0
LUV Yearly Dividends per shareLUV Yearly Dividends per shareYearly Dividends per share 2016 2017 2018 2019 2020 2023 2024 2025 2026 0.2 0.4 0.6 0.8

5.3 Sustainability

  • 90.48% of the earnings are spent on dividend by LUV. This is not a sustainable payout ratio.
  • LUV's earnings are growing more than its dividend. This makes the dividend growth sustainable.
DP90.48%
EPS Next 2Y129.51%
EPS Next 3Y79.06%
LUV Yearly Income VS Free CF VS DividendLUV Yearly Income VS Free CF VS DividendYearly Income VS Free CF VS Dividend 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 0 2B -2B
LUV Dividend Payout.LUV Dividend Payout, showing the Payout Ratio.LUV Dividend Payout.PayoutRetained Earnings

More info and screens

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LUV Fundamentals: All Metrics, Ratios and Statistics

SOUTHWEST AIRLINES CO

NYSE:LUV (3/23/2026, 10:51:55 AM)

41.35

+1.94 (+4.92%)

Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupTransportation
GICS IndustryPassenger Airlines
Earnings (Last)01-28
Earnings (Next)04-22
Inst Owners97.78%
Inst Owner Change-7.62%
Ins Owners0.93%
Ins Owner Change-0.15%
Market Cap20.32B
Revenue(TTM)28.06B
Net Income(TTM)441.00M
Analysts67.33
Price Target48.63 (17.61%)
Short Float %5.05%
Short Ratio2.32
Dividend
Industry RankSector Rank
Dividend Yield 1.76%
Yearly Dividend0.72
Dividend Growth(5Y)16.25%
DP90.48%
Div Incr Years0
Div Non Decr Years0
Ex-Date03-12
Surprises & Revisions
EPS beat(2)1
Avg EPS beat(2)216.06%
Min EPS beat(2)-0.64%
Max EPS beat(2)432.76%
EPS beat(4)2
Avg EPS beat(4)111.2%
Min EPS beat(4)-16.06%
Max EPS beat(4)432.76%
EPS beat(8)5
Avg EPS beat(8)560.05%
EPS beat(12)6
Avg EPS beat(12)389.99%
EPS beat(16)8
Avg EPS beat(16)279.85%
Revenue beat(2)0
Avg Revenue beat(2)-1.26%
Min Revenue beat(2)-1.94%
Max Revenue beat(2)-0.59%
Revenue beat(4)0
Avg Revenue beat(4)-1.2%
Min Revenue beat(4)-1.94%
Max Revenue beat(4)-0.59%
Revenue beat(8)2
Avg Revenue beat(8)-0.81%
Revenue beat(12)3
Avg Revenue beat(12)-0.79%
Revenue beat(16)3
Avg Revenue beat(16)-0.77%
PT rev (1m)5.51%
PT rev (3m)41.6%
EPS NQ rev (1m)-4.52%
EPS NQ rev (3m)147.92%
EPS NY rev (1m)4.39%
EPS NY rev (3m)64.89%
Revenue NQ rev (1m)0.19%
Revenue NQ rev (3m)3.61%
Revenue NY rev (1m)0.61%
Revenue NY rev (3m)4.94%
Valuation
Industry RankSector Rank
PE 41.77
Fwd PE 9.45
P/S 0.72
P/FCF N/A
P/OCF 11.03
P/B 2.55
P/tB 3.03
EV/EBITDA 10.58
EPS(TTM)0.99
EY2.39%
EPS(NY)4.38
Fwd EY10.58%
FCF(TTM)-1.69
FCFYN/A
OCF(TTM)3.75
OCFY9.07%
SpS57.12
BVpS16.24
TBVpS13.67
PEG (NY)0.12
PEG (5Y)N/A
Graham Number19.02
Profitability
Industry RankSector Rank
ROA 1.52%
ROE 5.53%
ROCE 2.36%
ROIC 1.84%
ROICexc 2.24%
ROICexgc 2.45%
OM 1.53%
PM (TTM) 1.57%
GM 73.57%
FCFM N/A
ROA(3y)1.39%
ROA(5y)1.68%
ROE(3y)4.81%
ROE(5y)5.77%
ROIC(3y)1.36%
ROIC(5y)N/A
ROICexc(3y)2.08%
ROICexc(5y)N/A
ROICexgc(3y)2.29%
ROICexgc(5y)N/A
ROCE(3y)1.74%
ROCE(5y)N/A
ROICexgc growth 3Y-29.98%
ROICexgc growth 5YN/A
ROICexc growth 3Y-29.6%
ROICexc growth 5YN/A
OM growth 3Y-29.69%
OM growth 5YN/A
PM growth 3Y-11.45%
PM growth 5YN/A
GM growth 3Y2.37%
GM growth 5Y2.24%
F-Score7
Asset Turnover0.97
Health
Industry RankSector Rank
Debt/Equity 0.57
Debt/FCF N/A
Debt/EBITDA 2.3
Cap/Depr 171.35%
Cap/Sales 9.53%
Interest Coverage 3.96
Cash Conversion 92.66%
Profit Quality N/A
Current Ratio 0.52
Quick Ratio 0.45
Altman-Z 2.14
F-Score7
WACC9.08%
ROIC/WACC0.2
Cap/Depr(3y)176.77%
Cap/Depr(5y)172.51%
Cap/Sales(3y)10.24%
Cap/Sales(5y)10.1%
Profit Quality(3y)N/A
Profit Quality(5y)N/A
High Growth Momentum
Growth
EPS 1Y (TTM)6.45%
EPS 3Y-3.45%
EPS 5YN/A
EPS Q2Q%3.57%
EPS Next Y342.07%
EPS Next 2Y129.51%
EPS Next 3Y79.06%
EPS Next 5Y47.38%
Revenue 1Y (TTM)2.11%
Revenue growth 3Y5.63%
Revenue growth 5Y25.41%
Sales Q2Q%5.61%
Revenue Next Year13.42%
Revenue Next 2Y8.94%
Revenue Next 3Y7.25%
Revenue Next 5Y6.37%
EBIT growth 1Y33.33%
EBIT growth 3Y-25.74%
EBIT growth 5YN/A
EBIT Next Year714.35%
EBIT Next 3Y113.87%
EBIT Next 5Y62.48%
FCF growth 1Y48.64%
FCF growth 3YN/A
FCF growth 5YN/A
OCF growth 1Y298.7%
OCF growth 3Y-21.38%
OCF growth 5YN/A

SOUTHWEST AIRLINES CO / LUV Fundamental Analysis FAQ

Can you provide the ChartMill fundamental rating for SOUTHWEST AIRLINES CO?

ChartMill assigns a fundamental rating of 5 / 10 to LUV.


What is the valuation status of SOUTHWEST AIRLINES CO (LUV) stock?

ChartMill assigns a valuation rating of 5 / 10 to SOUTHWEST AIRLINES CO (LUV). This can be considered as Fairly Valued.


What is the profitability of LUV stock?

SOUTHWEST AIRLINES CO (LUV) has a profitability rating of 6 / 10.


How financially healthy is SOUTHWEST AIRLINES CO?

The financial health rating of SOUTHWEST AIRLINES CO (LUV) is 4 / 10.


What is the expected EPS growth for SOUTHWEST AIRLINES CO (LUV) stock?

The Earnings per Share (EPS) of SOUTHWEST AIRLINES CO (LUV) is expected to grow by 342.07% in the next year.