Southwest Airlines Company
Exchange: NYSESector: IndustrialsIndustry: Airlines
Southwest Airlines Co. operates Southwest Airlines, a major passenger airline that provides scheduled air transportation in the United States and near-international markets. We commenced service on June 18, 1971, with three Boeing 737 aircraft serving three Texas cities: Dallas, Houston, and San Antonio. As of September 30, 2025, we had a total of 802 Boeing 737 aircraft in our fleet and served 117 destinations in the United States and near-international countries.
Did you know?
LUV's revenue grew at a 3.8% CAGR over the last 6 years.
Current Price
$39.35
-3.84%GoodMoat Value
$43.20
9.8% undervaluedProfile
Valuation (TTM)
Market Cap$20.35B
P/E46.15
EV$23.62B
P/B2.55
Shares Out517.16M
P/Sales0.73
Revenue$28.06B
EV/EBITDA10.08
Southwest Airlines Company (LUV) Stock Analysis
GoodMoat Analysis
Southwest Airlines fails the initial gate of the GoodMoat framework, lacking a durable competitive moat and demonstrating weak financial quality. Its valuation appears full, with a P/E of 47x on minimal profitability, offering no clear margin of safety for a value investor.
Read full analysis
Southwest Airlines is a major US passenger airline known for its low-cost, point-to-point route model. Applying the GoodMoat framework, the company shows significant weaknesses in both moat and quality. Its Moat Score is low, likely failing to meet the 5+ threshold for a durable advantage. While its brand and unique operational model offer some differentiation, the airline industry is highly competitive with low switching costs, high capital intensity, and vulnerability to economic cycles, limiting most traditional moat sources. The Quality Indicators are predominantly weak. Key metrics like a 1.6% profit margin, 5.5% ROE (far below the 15-20% threshold), and a -4.0% FCF Yield indicate poor returns on capital and cash generation. The debt/equity ratio of 0.75 is manageable but does not offset the weak profitability. Valuation is unfavourable. A P/E of 47.1 is extremely high for a company with 7.4% revenue growth and minimal margins, suggesting the market price requires perfect future execution. The GoodMoat Target of $43.20 implies only a marginal 7.5% potential upside, which falls into the 'Marginal' (10-20%) or 'Unfavourable' (<10%) band for Margin of Safety and does not provide the cushion a value investor typically seeks. Following the Decision Framework, the business fails the initial Moat & Quality Gate, making further deep valuation analysis less relevant. The combination of a weak competitive position, poor financial quality, and full valuation makes this an unfavourable prospect for a value-oriented investigation. Analysis based on data as of 2024-05-15.
Market Cap$20.35B
Current Price$39.35
P/E Ratio46.15
Forward P/E—
PEG Ratio1.19
EPS$0.79
Book Value$15.43
P/B Ratio2.55
LUV Financial Charts
FCF vs CAPEX
FCFCAPEX
Cash vs Debt
Net Debt: 2.8B
Revenue
22.4B
FY19
9.0B
FY20
15.8B
FY21
23.8B
FY22
26.1B
FY23
27.5B
FY24
28.1B
FY25
Net Income
2.3B
FY19
—
FY20
977M
FY21
539M
FY22
465M
FY23
465M
FY24
441M
FY25
LUV 52-Week Range
$25.01
$54.55
50-Day MA: $43.48200-Day MA: $37.47
Did you know?
LUV's revenue grew at a 3.8% CAGR over the last 6 years.
Southwest Airlines Company (LUV) Financial Summary
Southwest Airlines Company (LUV) is a Industrials company in the Airlines industry, listed on NYSE. The stock currently trades at $39.35 with a market capitalization of $20.35B.
Key valuation metrics include a P/E ratio of 46.15, price-to-book ratio of 2.55, and EPS of $0.79. The company reports a profit margin of 1.6% and return on equity of 5.5%.
LUV Key Financial Metrics
| Metric | Value |
|---|---|
| Market Cap | $20.35B |
| P/E Ratio | 46.15 |
| EPS | $0.79 |
| P/B Ratio | 2.55 |
| P/S Ratio | 0.73 |
| EV/EBITDA | 10.08 |
| Dividend Yield | 1.96% |
| Profit Margin | 1.6% |
| Return on Equity | 5.5% |
| Debt/Equity | 0.75 |
LUV Revenue & Earnings History
| Year | Revenue | Net Income |
|---|---|---|
| FY19 | $22.43B | $2.30B |
| FY20 | $9.05B | $-3.07B |
| FY21 | $15.79B | $977.00M |
| FY22 | $23.81B | $539.00M |
| FY23 | $26.09B | $465.00M |
| FY24 | $27.48B | $465.00M |
| FY25 | $28.06B | $441.00M |
Southwest Airlines Company (LUV) Valuation
Based on GoodMoat's DCF model, Southwest Airlines Company has a fair value estimate of $43.20. At the current price of $39.35, the stock appears 8.9% undervalued relative to our intrinsic value estimate.
LUV Quality Indicators
Southwest Airlines Company maintains a profit margin of 1.6% and an operating margin of 1.5%. Return on equity stands at 5.5%. The current ratio is 0.52. Debt-to-equity ratio is 0.75.
About Southwest Airlines Company
Southwest Airlines Co. operates Southwest Airlines, a major passenger airline that provides scheduled air transportation in the United States and near-international markets. We commenced service on June 18, 1971, with three Boeing 737 aircraft serving three Texas cities: Dallas, Houston, and San Antonio. As of September 30, 2025, we had a total of 802 Boeing 737 aircraft in our fleet and served 117 destinations in the United States and near-international countries.
LUV Free Cash Flow
Southwest Airlines Company generated $-831.00M in trailing twelve-month free cash flow, representing an FCF yield of -4.08%. This low FCF yield may reflect heavy reinvestment or growth spending.
LUV Shares Outstanding
Southwest Airlines Company has 0.52 billion shares outstanding at a share price of $39.35, giving it a market capitalization of $20.35B.