SOUTHWEST AIRLINES CO (LUV) Fundamental Analysis & Valuation

NYSE:LUV • US8447411088

Current stock price

37.22 USD
-0.79 (-2.08%)
At close:
37.48 USD
+0.26 (+0.7%)
Pre-Market:

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

  • LUV had positive earnings in the past year.
  • In the past year LUV had a positive cash flow from operations.
  • LUV had positive earnings in each of the past 5 years.
  • LUV had a positive operating cash flow in each of the past 5 years.
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

  • The Return On Assets of LUV (2.78%) is comparable to the rest of the industry.
  • LUV has a Return On Equity of 11.88%. This is in the better half of the industry: LUV outperforms 72.73% of its industry peers.
  • Looking at the Return On Invested Capital, with a value of 4.54%, LUV is in line with its industry, outperforming 54.55% of the companies in the same industry.
  • Measured over the past 3 years, the Average Return On Invested Capital for LUV is significantly below the industry average of 28.18%.
  • The last Return On Invested Capital (4.54%) for LUV is above the 3 year average (1.36%), which is a sign of increasing profitability.
Industry RankSector Rank
ROA 2.78%
ROE 11.88%
ROIC 4.54%
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 2.83%, LUV is in line with its industry, outperforming 59.09% of the companies in the same industry.
  • LUV's Profit Margin has declined in the last couple of years.
  • Looking at the Operating Margin, with a value of 3.40%, LUV is in line with its industry, outperforming 50.00% of the companies in the same industry.
  • In the last couple of years the Operating Margin of LUV has declined.
  • Looking at the Gross Margin, with a value of 73.78%, LUV belongs to the top of the industry, outperforming 100.00% of the companies in the same industry.
  • In the last couple of years the Gross Margin of LUV has grown nicely.
Industry RankSector Rank
OM 3.4%
PM (TTM) 2.83%
GM 73.78%
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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3

2. LUV Health Analysis

2.1 Basic Checks

  • LUV has a Return on Invested Capital (ROIC), which is below the Cost of Capital (WACC), which means it is destroying value.
  • LUV has less shares outstanding than it did 1 year ago.
  • LUV has less shares outstanding than it did 5 years ago.
  • Compared to 1 year ago, LUV has an improved debt to assets ratio.
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 2.10. 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's Altman-Z score of 2.10 is amongst the best of the industry. LUV outperforms 81.82% of its industry peers.
  • LUV has a Debt/Equity ratio of 0.66. This is a neutral value indicating LUV is somewhat dependend on debt financing.
  • LUV has a Debt to Equity ratio of 0.66. This is amongst the best in the industry. LUV outperforms 81.82% of its industry peers.
Industry RankSector Rank
Debt/Equity 0.66
Debt/FCF N/A
Altman-Z 2.1
ROIC/WACC0.52
WACC8.65%
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 0.48 indicates that LUV may have some problems paying its short term obligations.
  • Looking at the Current ratio, with a value of 0.48, LUV is doing worse than 63.64% of the companies in the same industry.
  • LUV has a Quick Ratio of 0.48. This is a bad value and indicates that LUV is not financially healthy enough and could expect problems in meeting its short term obligations.
  • LUV has a Quick ratio of 0.41. This is in the lower half of the industry: LUV underperforms 63.64% of its industry peers.
Industry RankSector Rank
Current Ratio 0.48
Quick Ratio 0.41
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

6

3. LUV Growth Analysis

3.1 Past

  • The Earnings Per Share has grown by an impressive 35.34% over the past year.
  • LUV shows a decrease in Earnings Per Share. Measured over the last years, the EPS has been decreasing by -3.45% yearly.
  • Looking at the last year, LUV shows a small growth in Revenue. The Revenue has grown by 4.72% in the last year.
  • 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)35.34%
EPS 3Y-3.45%
EPS 5YN/A
EPS Q2Q%446.15%
Revenue 1Y (TTM)4.72%
Revenue growth 3Y5.63%
Revenue growth 5Y25.41%
Sales Q2Q%12.77%

3.2 Future

  • Based on estimates for the next years, LUV will show a very strong growth in Earnings Per Share. The EPS will grow by 42.20% on average per year.
  • LUV is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 3.22% yearly.
EPS Next Y271.92%
EPS Next 2Y123.43%
EPS Next 3Y76.68%
EPS Next 5Y42.2%
Revenue Next Year15.15%
Revenue Next 2Y9.23%
Revenue Next 3Y7.32%
Revenue Next 5Y3.22%

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

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5

4. LUV Valuation Analysis

4.1 Price/Earnings Ratio

  • LUV is valuated rather expensively with a Price/Earnings ratio of 23.71.
  • Compared to the rest of the industry, the Price/Earnings ratio of LUV is on the same level as its industry peers.
  • LUV's Price/Earnings ratio indicates a similar valuation than the S&P500 average which is at 26.54.
  • LUV is valuated cheaply with a Price/Forward Earnings ratio of 7.53.
  • Compared to the rest of the industry, the Price/Forward Earnings ratio of LUV indicates a somewhat cheap valuation: LUV is cheaper than 77.27% of the companies listed in the same industry.
  • When comparing the Price/Forward Earnings ratio of LUV to the average of the S&P500 Index (21.68), we can say LUV is valued rather cheaply.
Industry RankSector Rank
PE 23.71
Fwd PE 7.53
LUV Price Earnings VS Forward Price EarningsLUV Price Earnings VS Forward Price Earnings ChartPrice Earnings - Forward Price Earnings PE FPE 5 10 15 20 25

4.2 Price Multiples

  • The rest of the industry has a similar Enterprise Value to EBITDA ratio as LUV.
Industry RankSector Rank
P/FCF N/A
EV/EBITDA 8
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

  • The low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
  • LUV has a very decent profitability rating, which may justify a higher PE ratio.
  • LUV's earnings are expected to grow with 76.68% in the coming years. This may justify a more expensive valuation.
PEG (NY)0.09
PEG (5Y)N/A
EPS Next 2Y123.43%
EPS Next 3Y76.68%

More info and screens

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

6

5. LUV Dividend Analysis

5.1 Amount

  • LUV has a Yearly Dividend Yield of 1.93%. Purely for dividend investing, there may be better candidates out there.
  • The stock price of LUV dropped by -21.68% in the last 3 months. With lower prices the dividend yield is higher, but it may be a sign investors do not trust the long term dividend.
  • LUV's Dividend Yield is rather good when compared to the industry average which is at 0.89. LUV pays more dividend than 81.82% of the companies in the same industry.
  • Compared to an average S&P500 Dividend Yield of 1.82, LUV has a dividend comparable with the average S&P500 company.
Industry RankSector Rank
Dividend Yield 1.93%

5.2 History

  • The dividend of LUV is nicely growing with an annual growth rate of 16.25%!
  • LUV has paid a dividend for at least 10 years, which is a reliable track record.
  • LUV has decreased its dividend recently.
Dividend Growth(5Y)16.25%
Div Incr Years0
Div Non Decr Years1
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

  • LUV pays out 47.12% of its income as dividend. This is a bit on the high side, but may be sustainable.
  • LUV's earnings are growing more than its dividend. This makes the dividend growth sustainable.
DP47.12%
EPS Next 2Y123.43%
EPS Next 3Y76.68%
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

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LUV Fundamentals: All Metrics, Ratios and Statistics

SOUTHWEST AIRLINES CO

NYSE:LUV (4/29/2026, 8:04:00 PM)

Premarket: 37.48 +0.26 (+0.7%)

37.22

-0.79 (-2.08%)

Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupTransportation
GICS IndustryPassenger Airlines
Industry Strength16.77
Industry Growth7.45
Earnings (Last)04-22
Earnings (Next)07-23
Inst Owners93.51%
Inst Owner Change-0.46%
Ins Owners0.97%
Ins Owner Change-0.35%
Market Cap18.28B
Revenue(TTM)28.88B
Net Income(TTM)817.00M
Analysts67.33
Price Target46.26 (24.29%)
Short Float %3.98%
Short Ratio2.1
Dividend
Industry RankSector Rank
Dividend Yield 1.93%
Yearly Dividend0.72
Dividend Growth(5Y)16.25%
DP47.12%
Div Incr Years0
Div Non Decr Years1
Ex-Date03-12
Surprises & Revisions
EPS beat(2)0
Avg EPS beat(2)-3.23%
Min EPS beat(2)-5.82%
Max EPS beat(2)-0.64%
EPS beat(4)1
Avg EPS beat(4)102.56%
Min EPS beat(4)-16.06%
Max EPS beat(4)432.76%
EPS beat(8)5
Avg EPS beat(8)560.06%
EPS beat(12)6
Avg EPS beat(12)390.78%
EPS beat(16)8
Avg EPS beat(16)279.74%
Revenue beat(2)0
Avg Revenue beat(2)-1.57%
Min Revenue beat(2)-1.94%
Max Revenue beat(2)-1.21%
Revenue beat(4)0
Avg Revenue beat(4)-1.35%
Min Revenue beat(4)-1.94%
Max Revenue beat(4)-0.59%
Revenue beat(8)2
Avg Revenue beat(8)-0.67%
Revenue beat(12)3
Avg Revenue beat(12)-0.78%
Revenue beat(16)3
Avg Revenue beat(16)-0.81%
PT rev (1m)-7.04%
PT rev (3m)8.55%
EPS NQ rev (1m)-45.39%
EPS NQ rev (3m)-46.95%
EPS NY rev (1m)-15.87%
EPS NY rev (3m)13.47%
Revenue NQ rev (1m)1.28%
Revenue NQ rev (3m)6.41%
Revenue NY rev (1m)1.52%
Revenue NY rev (3m)5.46%
Valuation
Industry RankSector Rank
PE 23.71
Fwd PE 7.53
P/S 0.63
P/FCF N/A
P/OCF 7.62
P/B 2.66
P/tB 3.1
EV/EBITDA 8
EPS(TTM)1.57
EY4.22%
EPS(NY)4.94
Fwd EY13.28%
FCF(TTM)-0.82
FCFYN/A
OCF(TTM)4.89
OCFY13.13%
SpS58.82
BVpS14
TBVpS12.02
PEG (NY)0.09
PEG (5Y)N/A
Graham Number22.2383 (-40.25%)
Profitability
Industry RankSector Rank
ROA 2.78%
ROE 11.88%
ROCE 5.81%
ROIC 4.54%
ROICexc 5.65%
ROICexgc 6.09%
OM 3.4%
PM (TTM) 2.83%
GM 73.78%
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 Turnover0.98
Health
Industry RankSector Rank
Debt/Equity 0.66
Debt/FCF N/A
Debt/EBITDA 1.78
Cap/Depr 179.39%
Cap/Sales 9.7%
Interest Coverage 250
Cash Conversion 94.38%
Profit Quality N/A
Current Ratio 0.48
Quick Ratio 0.41
Altman-Z 2.1
F-Score7
WACC8.65%
ROIC/WACC0.52
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)35.34%
EPS 3Y-3.45%
EPS 5YN/A
EPS Q2Q%446.15%
EPS Next Y271.92%
EPS Next 2Y123.43%
EPS Next 3Y76.68%
EPS Next 5Y42.2%
Revenue 1Y (TTM)4.72%
Revenue growth 3Y5.63%
Revenue growth 5Y25.41%
Sales Q2Q%12.77%
Revenue Next Year15.15%
Revenue Next 2Y9.23%
Revenue Next 3Y7.32%
Revenue Next 5Y3.22%
EBIT growth 1Y99.8%
EBIT growth 3Y-25.74%
EBIT growth 5YN/A
EBIT Next Year648.67%
EBIT Next 3Y111.02%
EBIT Next 5Y54.98%
FCF growth 1Y45.6%
FCF growth 3YN/A
FCF growth 5YN/A
OCF growth 1Y1.95%
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.


How profitable is SOUTHWEST AIRLINES CO (LUV) stock?

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


Can you provide the PE and PB ratios for LUV stock?

The Price/Earnings (PE) ratio for SOUTHWEST AIRLINES CO (LUV) is 23.71 and the Price/Book (PB) ratio is 2.66.


What is the earnings growth outlook for SOUTHWEST AIRLINES CO?

The Earnings per Share (EPS) of SOUTHWEST AIRLINES CO (LUV) is expected to grow by 271.92% in the next year.