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SOUTHWEST AIRLINES CO (LUV) Stock Fundamental Analysis

NYSE:LUV - New York Stock Exchange, Inc. - US8447411088 - Common Stock - Currency: USD

27.96  +0.7 (+2.57%)

Premarket: 27.95 -0.01 (-0.04%)

Fundamental Rating

4

LUV gets a fundamental rating of 4 out of 10. The analysis compared the fundamentals against 23 industry peers in the Passenger Airlines industry. LUV has only an average score on both its financial health and profitability. LUV has a decent growth rate and is not valued too expensively.


Dividend Valuation Growth Profitability Health

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5

1. Profitability

1.1 Basic Checks

LUV had positive earnings in the past year.
In the past year LUV had a positive cash flow from operations.
Of the past 5 years LUV 4 years were profitable.
Of the past 5 years LUV 4 years 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 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 0 2B -2B 4B -4B

1.2 Ratios

Looking at the Return On Assets, with a value of 1.64%, LUV is in the better half of the industry, outperforming 60.87% of the companies in the same industry.
LUV has a Return On Equity (5.83%) which is in line with its industry peers.
LUV has a Return On Invested Capital (1.92%) which is comparable to the rest of the industry.
The Average Return On Invested Capital over the past 3 years for LUV is significantly below the industry average of 11.17%.
The last Return On Invested Capital (1.92%) for LUV is above the 3 year average (1.77%), which is a sign of increasing profitability.
Industry RankSector Rank
ROA 1.64%
ROE 5.83%
ROIC 1.92%
ROA(3y)1.39%
ROA(5y)-0.4%
ROE(3y)4.65%
ROE(5y)-2.26%
ROIC(3y)1.77%
ROIC(5y)N/A
LUV Yearly ROA, ROE, ROICLUV Yearly ROA, ROE, ROICYearly ROA, ROE, ROIC 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 0 20 -20

1.3 Margins

With a Profit Margin value of 1.98%, LUV perfoms like the industry average, outperforming 56.52% of the companies in the same industry.
LUV's Profit Margin has declined in the last couple of years.
The Operating Margin of LUV (1.78%) is comparable to the rest of the industry.
In the last couple of years the Operating Margin of LUV has declined.
LUV has a better Gross Margin (72.63%) than 95.65% of its industry peers.
In the last couple of years the Gross Margin of LUV has remained more or less at the same level.
Industry RankSector Rank
OM 1.78%
PM (TTM) 1.98%
GM 72.63%
OM growth 3YN/A
OM growth 5Y-38.41%
PM growth 3Y-35.09%
PM growth 5Y-30.26%
GM growth 3Y0.9%
GM growth 5Y-0.77%
LUV Yearly Profit, Operating, Gross MarginsLUV Yearly Profit, Operating, Gross MarginsYearly Profit, Operating, Gross Margins 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 0 20 -20 40 -40 60

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4

2. Health

2.1 Basic Checks

With a Return on Invested Capital (ROIC) below the Cost of Capital (WACC), LUV is destroying value.
LUV has less shares outstanding than it did 1 year ago.
Compared to 5 years ago, LUV has more shares outstanding
The debt/assets ratio for LUV has been reduced compared to a year ago.
LUV Yearly Shares OutstandingLUV Yearly Shares OutstandingYearly Shares Outstanding 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 200M 400M 600M
LUV Yearly Total Debt VS Total AssetsLUV Yearly Total Debt VS Total AssetsYearly Total Debt VS Total Assets 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 10B 20B 30B

2.2 Solvency

An Altman-Z score of 1.85 indicates that LUV is not a great score, but indicates only limited risk for bankruptcy at the moment.
With an excellent Altman-Z score value of 1.85, LUV belongs to the best of the industry, outperforming 82.61% of the companies in the same industry.
A Debt/Equity ratio of 0.44 indicates that LUV is not too dependend on debt financing.
LUV has a Debt to Equity ratio of 0.44. This is amongst the best in the industry. LUV outperforms 82.61% of its industry peers.
Industry RankSector Rank
Debt/Equity 0.44
Debt/FCF N/A
Altman-Z 1.85
ROIC/WACC0.25
WACC7.64%
LUV Yearly LT Debt VS Equity VS FCFLUV Yearly LT Debt VS Equity VS FCFYearly LT Debt VS Equity VS FCF 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 0 2B 4B 6B 8B 10B

2.3 Liquidity

A Current Ratio of 0.77 indicates that LUV may have some problems paying its short term obligations.
Looking at the Current ratio, with a value of 0.77, LUV is in the better half of the industry, outperforming 65.22% of the companies in the same industry.
A Quick Ratio of 0.72 indicates that LUV may have some problems paying its short term obligations.
The Quick ratio of LUV (0.72) is better than 65.22% of its industry peers.
Industry RankSector Rank
Current Ratio 0.77
Quick Ratio 0.72
LUV Yearly Current Assets VS Current LiabilitesLUV Yearly Current Assets VS Current LiabilitesYearly Current Assets VS Current Liabilites 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 5B 10B 15B

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4

3. Growth

3.1 Past

LUV shows a strong negative growth in Earnings Per Share. In the last year the EPS decreased by -40.76%.
Measured over the past years, LUV shows a very negative growth in Earnings Per Share. The EPS has been decreasing by -26.91% on average per year.
Looking at the last year, LUV shows a small growth in Revenue. The Revenue has grown by 3.25% in the last year.
Measured over the past years, LUV shows a small growth in Revenue. The Revenue has been growing by 4.15% on average per year.
EPS 1Y (TTM)-40.76%
EPS 3Y-23.26%
EPS 5Y-26.91%
EPS Q2Q%34.07%
Revenue 1Y (TTM)3.25%
Revenue growth 3Y20.29%
Revenue growth 5Y4.15%
Sales Q2Q%1.56%

3.2 Future

LUV is expected to show a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 35.53% yearly.
The Revenue is expected to grow by 2.76% on average over the next years.
EPS Next Y57.54%
EPS Next 2Y68.64%
EPS Next 3Y55.36%
EPS Next 5Y35.53%
Revenue Next Year4.14%
Revenue Next 2Y5.2%
Revenue Next 3Y5%
Revenue Next 5Y2.76%

3.3 Evolution

The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.
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 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 10B 20B 30B
LUV Yearly EPS VS EstimatesLUV Yearly EPS VS EstimatesYearly EPS VS Estimates 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 0 2 -2 4 -4 -6

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4

4. Valuation

4.1 Price/Earnings Ratio

A Price/Earnings ratio of 30.06 indicates a quite expensive valuation of LUV.
LUV's Price/Earnings is on the same level as the industry average.
When comparing the Price/Earnings ratio of LUV to the average of the S&P500 Index (28.88), we can say LUV is valued inline with the index average.
LUV is valuated reasonably with a Price/Forward Earnings ratio of 10.57.
Compared to the rest of the industry, the Price/Forward Earnings ratio of LUV is on the same level as its industry peers.
The average S&P500 Price/Forward Earnings ratio is at 21.20. LUV is valued rather cheaply when compared to this.
Industry RankSector Rank
PE 30.06
Fwd PE 10.57
LUV Price Earnings VS Forward Price EarningsLUV Price Earnings VS Forward Price Earnings ChartPrice Earnings - Forward Price Earnings PE FPE 10 20 30

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 6.73
LUV Per share dataLUV EPS, Sales, OCF, FCF, BookValue per sharePer Share Data Per Share 0 10 20 30 40

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.
LUV's earnings are expected to grow with 55.36% in the coming years. This may justify a more expensive valuation.
PEG (NY)0.52
PEG (5Y)N/A
EPS Next 2Y68.64%
EPS Next 3Y55.36%

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5

5. Dividend

5.1 Amount

With a Yearly Dividend Yield of 2.64%, LUV has a reasonable but not impressive dividend return.
LUV's Dividend Yield is rather good when compared to the industry average which is at 2.99. LUV pays more dividend than 91.30% of the companies in the same industry.
Compared to an average S&P500 Dividend Yield of 2.45, LUV has a dividend comparable with the average S&P500 company.
Industry RankSector Rank
Dividend Yield 2.64%

5.2 History

The dividend of LUV has a limited annual growth rate of 0.82%.
LUV has paid a dividend for at least 10 years, which is a reliable track record.
Dividend Growth(5Y)0.82%
Div Incr Years0
Div Non Decr Years0
LUV Yearly Dividends per shareLUV Yearly Dividends per shareYearly Dividends per share 2015 2016 2017 2018 2019 2020 2023 2024 2025 0.2 0.4 0.6 0.8

5.3 Sustainability

LUV pays out 58.97% 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.
DP58.97%
EPS Next 2Y68.64%
EPS Next 3Y55.36%
LUV Yearly Income VS Free CF VS DividendLUV Yearly Income VS Free CF VS DividendYearly Income VS Free CF VS Dividend 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 0 2B -2B
LUV Dividend Payout.LUV Dividend Payout, showing the Payout Ratio.LUV Dividend Payout.PayoutRetained Earnings

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SOUTHWEST AIRLINES CO

NYSE:LUV (4/30/2025, 8:19:20 PM)

Premarket: 27.95 -0.01 (-0.04%)

27.96

+0.7 (+2.57%)

Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupTransportation
GICS IndustryPassenger Airlines
Earnings (Last)04-24 2025-04-24/bmo
Earnings (Next)07-23 2025-07-23/bmo
Inst Owners92.89%
Inst Owner Change-0.36%
Ins Owners0.78%
Ins Owner Change7.94%
Market Cap16.05B
Analysts55.33
Price Target30.3 (8.37%)
Short Float %5.83%
Short Ratio2.37
Dividend
Industry RankSector Rank
Dividend Yield 2.64%
Yearly Dividend0.72
Dividend Growth(5Y)0.82%
DP58.97%
Div Incr Years0
Div Non Decr Years0
Ex-Date03-12 2025-03-12 (0.18)
Surprises & Revisions
EPS beat(2)N/A
Avg EPS beat(2)N/A
Min EPS beat(2)N/A
Max EPS beat(2)N/A
EPS beat(4)N/A
Avg EPS beat(4)N/A
Min EPS beat(4)N/A
Max EPS beat(4)N/A
EPS beat(8)N/A
Avg EPS beat(8)N/A
EPS beat(12)N/A
Avg EPS beat(12)N/A
EPS beat(16)N/A
Avg EPS beat(16)N/A
Revenue beat(2)1
Avg Revenue beat(2)-0.17%
Min Revenue beat(2)-0.6%
Max Revenue beat(2)0.26%
Revenue beat(4)2
Avg Revenue beat(4)0.02%
Min Revenue beat(4)-0.6%
Max Revenue beat(4)1%
Revenue beat(8)3
Avg Revenue beat(8)-0.49%
Revenue beat(12)3
Avg Revenue beat(12)-0.63%
Revenue beat(16)5
Avg Revenue beat(16)-0.4%
PT rev (1m)-7.92%
PT rev (3m)-5.37%
EPS NQ rev (1m)-14.27%
EPS NQ rev (3m)-17.94%
EPS NY rev (1m)-16.25%
EPS NY rev (3m)-10.87%
Revenue NQ rev (1m)-1.95%
Revenue NQ rev (3m)-2.2%
Revenue NY rev (1m)-1.98%
Revenue NY rev (3m)-1.31%
Valuation
Industry RankSector Rank
PE 30.06
Fwd PE 10.57
P/S 0.58
P/FCF N/A
P/OCF 11.25
P/B 1.71
P/tB 1.91
EV/EBITDA 6.73
EPS(TTM)0.93
EY3.33%
EPS(NY)2.64
Fwd EY9.46%
FCF(TTM)-0.98
FCFYN/A
OCF(TTM)2.48
OCFY8.89%
SpS48.06
BVpS16.32
TBVpS14.63
PEG (NY)0.52
PEG (5Y)N/A
Profitability
Industry RankSector Rank
ROA 1.64%
ROE 5.83%
ROCE 2.54%
ROIC 1.92%
ROICexc 3.36%
ROICexgc 3.68%
OM 1.78%
PM (TTM) 1.98%
GM 72.63%
FCFM N/A
ROA(3y)1.39%
ROA(5y)-0.4%
ROE(3y)4.65%
ROE(5y)-2.26%
ROIC(3y)1.77%
ROIC(5y)N/A
ROICexc(3y)3.36%
ROICexc(5y)N/A
ROICexgc(3y)3.73%
ROICexgc(5y)N/A
ROCE(3y)2.35%
ROCE(5y)N/A
ROICexcg growth 3YN/A
ROICexcg growth 5Y-35.72%
ROICexc growth 3YN/A
ROICexc growth 5Y-35.74%
OM growth 3YN/A
OM growth 5Y-38.41%
PM growth 3Y-35.09%
PM growth 5Y-30.26%
GM growth 3Y0.9%
GM growth 5Y-0.77%
F-Score8
Asset Turnover0.83
Health
Industry RankSector Rank
Debt/Equity 0.44
Debt/FCF N/A
Debt/EBITDA 1.91
Cap/Depr 120.91%
Cap/Sales 7.21%
Interest Coverage 250
Cash Conversion 66.76%
Profit Quality N/A
Current Ratio 0.77
Quick Ratio 0.72
Altman-Z 1.85
F-Score8
WACC7.64%
ROIC/WACC0.25
Cap/Depr(3y)217.02%
Cap/Depr(5y)146.45%
Cap/Sales(3y)12.59%
Cap/Sales(5y)9.34%
Profit Quality(3y)N/A
Profit Quality(5y)N/A
High Growth Momentum
Growth
EPS 1Y (TTM)-40.76%
EPS 3Y-23.26%
EPS 5Y-26.91%
EPS Q2Q%34.07%
EPS Next Y57.54%
EPS Next 2Y68.64%
EPS Next 3Y55.36%
EPS Next 5Y35.53%
Revenue 1Y (TTM)3.25%
Revenue growth 3Y20.29%
Revenue growth 5Y4.15%
Sales Q2Q%1.56%
Revenue Next Year4.14%
Revenue Next 2Y5.2%
Revenue Next 3Y5%
Revenue Next 5Y2.76%
EBIT growth 1Y121.17%
EBIT growth 3YN/A
EBIT growth 5Y-35.86%
EBIT Next Year654.65%
EBIT Next 3Y128.38%
EBIT Next 5Y70.77%
FCF growth 1Y46.84%
FCF growth 3YN/A
FCF growth 5YN/A
OCF growth 1Y-58.36%
OCF growth 3Y-41.62%
OCF growth 5Y-35.02%