SOUTHWEST AIRLINES CO (LUV) Fundamental Analysis & Valuation

NYSE:LUV • US8447411088

Current stock price

40.92 USD
-0.9 (-2.15%)
At close:
41.2101 USD
+0.29 (+0.71%)
After Hours:

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

5

1. LUV Profitability Analysis

1.1 Basic Checks

  • LUV had positive earnings in the past year.
  • LUV had a positive operating cash flow in the past year.
  • LUV had positive earnings in each of the past 5 years.
  • In the past 5 years LUV always reported a positive cash flow from operatings.
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 (1.52%) which is in line with its industry peers.
  • Looking at the Return On Equity, with a value of 5.53%, LUV is in the better half of the industry, outperforming 68.18% of the companies in the same industry.
  • LUV's Return On Invested Capital of 1.84% is on the low side compared to the rest of the industry. LUV is outperformed by 63.64% of its industry peers.
  • The Average Return On Invested Capital over the past 3 years for LUV is significantly below the industry average of 28.11%.
  • 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

  • With a Profit Margin value of 1.57%, LUV perfoms like the industry average, outperforming 59.09% of the companies in the same industry.
  • In the last couple of years the Profit Margin of LUV has declined.
  • With a Operating Margin value of 1.53%, LUV is not doing good in the industry: 63.64% of the companies in the same industry are doing better.
  • LUV's Operating Margin has declined in the last couple of years.
  • 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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3

2. LUV Health Analysis

2.1 Basic Checks

  • The Return on Invested Capital (ROIC) is below the Cost of Capital (WACC), so LUV is destroying value.
  • LUV has less shares outstanding than it did 1 year ago.
  • The number of shares outstanding for LUV has been reduced compared to 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 2.17. 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 (2.17) than 81.82% of its industry peers.
  • LUV has a Debt/Equity ratio of 0.57. This is a neutral value indicating 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 86.36% of the companies in the same industry.
Industry RankSector Rank
Debt/Equity 0.57
Debt/FCF N/A
Altman-Z 2.17
ROIC/WACC0.21
WACC8.78%
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 doing worse than 63.64% 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.
  • The Quick ratio of LUV (0.45) is worse than 63.64% 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

  • The Earnings Per Share has been growing slightly by 6.45% 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.
  • The Revenue has been growing slightly by 2.11% in the past 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)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
  • The Revenue is expected to grow by 6.37% on average over the next years.
EPS Next Y271.92%
EPS Next 2Y123.43%
EPS Next 3Y76.68%
EPS Next 5Y47.38%
Revenue Next Year15.15%
Revenue Next 2Y9.23%
Revenue Next 3Y7.32%
Revenue Next 5Y6.37%

3.3 Evolution

  • The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.
  • When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
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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4

4. LUV Valuation Analysis

4.1 Price/Earnings Ratio

  • With a Price/Earnings ratio of 41.33, LUV can be considered very expensive at the moment.
  • Compared to the rest of the industry, the Price/Earnings ratio of LUV is on the same level as its industry peers.
  • When comparing the Price/Earnings ratio of LUV to the average of the S&P500 Index (27.71), we can say LUV is valued slightly more expensively.
  • Based on the Price/Forward Earnings ratio of 11.11, the valuation of LUV can be described as reasonable.
  • Based on the Price/Forward Earnings ratio, LUV is valued a bit cheaper than the industry average as 72.73% of the companies are valued more expensively.
  • LUV is valuated cheaply when we compare the Price/Forward Earnings ratio to 38.09, which is the current average of the S&P500 Index.
Industry RankSector Rank
PE 41.33
Fwd PE 11.11
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

  • Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of LUV is on the same level as its industry peers.
Industry RankSector Rank
P/FCF N/A
EV/EBITDA 11.17
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.
  • LUV's earnings are expected to grow with 76.68% in the coming years. This may justify a more expensive valuation.
PEG (NY)0.15
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

5

5. LUV Dividend Analysis

5.1 Amount

  • With a Yearly Dividend Yield of 1.77%, 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 0.85. LUV pays more dividend than 81.82% of the companies in the same industry.
  • Compared to an average S&P500 Dividend Yield of 1.81, LUV has a dividend comparable with the average S&P500 company.
Industry RankSector Rank
Dividend Yield 1.77%

5.2 History

  • On average, the dividend of LUV grows each year by 16.25%, which is quite nice.
  • 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

  • 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 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

More info and screens

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LUV Fundamentals: All Metrics, Ratios and Statistics

SOUTHWEST AIRLINES CO

NYSE:LUV (4/21/2026, 8:04:00 PM)

After market: 41.2101 +0.29 (+0.71%)

40.92

-0.9 (-2.15%)

Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupTransportation
GICS IndustryPassenger Airlines
Earnings (Last)01-28
Earnings (Next)04-22
Inst Owners93.51%
Inst Owner Change-0.55%
Ins Owners0.97%
Ins Owner Change-0.35%
Market Cap20.09B
Revenue(TTM)28.06B
Net Income(TTM)441.00M
Analysts67.33
Price Target45.21 (10.48%)
Short Float %4.21%
Short Ratio2.09
Dividend
Industry RankSector Rank
Dividend Yield 1.77%
Yearly Dividend0.72
Dividend Growth(5Y)16.25%
DP90.48%
Div Incr Years0
Div Non Decr Years1
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)-7.04%
PT rev (3m)8.55%
EPS NQ rev (1m)-4.52%
EPS NQ rev (3m)41.8%
EPS NY rev (1m)-15.87%
EPS NY rev (3m)30.2%
Revenue NQ rev (1m)0.99%
Revenue NQ rev (3m)4.04%
Revenue NY rev (1m)1.52%
Revenue NY rev (3m)5.46%
Valuation
Industry RankSector Rank
PE 41.33
Fwd PE 11.11
P/S 0.72
P/FCF N/A
P/OCF 10.91
P/B 2.52
P/tB 2.99
EV/EBITDA 11.17
EPS(TTM)0.99
EY2.42%
EPS(NY)3.68
Fwd EY9%
FCF(TTM)-1.69
FCFYN/A
OCF(TTM)3.75
OCFY9.17%
SpS57.15
BVpS16.25
TBVpS13.67
PEG (NY)0.15
PEG (5Y)N/A
Graham Number19.0266 (-53.5%)
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 2.17
F-Score7
WACC8.78%
ROIC/WACC0.21
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 Y271.92%
EPS Next 2Y123.43%
EPS Next 3Y76.68%
EPS Next 5Y47.38%
Revenue 1Y (TTM)2.11%
Revenue growth 3Y5.63%
Revenue growth 5Y25.41%
Sales Q2Q%5.61%
Revenue Next Year15.15%
Revenue Next 2Y9.23%
Revenue Next 3Y7.32%
Revenue Next 5Y6.37%
EBIT growth 1Y33.33%
EBIT growth 3Y-25.74%
EBIT growth 5YN/A
EBIT Next Year648.67%
EBIT Next 3Y111.02%
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 4 / 10 to LUV.


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

ChartMill assigns a valuation rating of 4 / 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 5 / 10.


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

The Price/Earnings (PE) ratio for SOUTHWEST AIRLINES CO (LUV) is 41.33 and the Price/Book (PB) ratio is 2.52.


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.