LUV Southwest Airlines
$39.90
▼ 2.3%Updated Oct 16, 2:25 PM ET
Report Card
LUV at a glance — five pillars scored 0–100 from real filed financials.
How the 0–100 rating is calculatedOverall: Neutral · 56/100. A wider, greener shape means more pillars look healthy. Dividends scores 0 when a company pays none — that is a choice, not a flaw.
Price — Past Year
▲ Up 53.9% in the year to Jul 6, 2026
Key Metrics
Market Cap
$24.56B
P/E
23.98x
Forward P/E (est.)
17.13x
ROE
10.7%
Revenue Growth
4.7%
EPS Growth
80.7%
Profit Margin
2.8%
FCF Yield
6.7%
Debt / Equity
0.61x
ROIC
3.0%
Interest Coverage
3.63x
Current Ratio
0.49x
Dividend Yield
1.6%
Implied Growth (rev. DCF)
—
Rating Score
56/100
Business Overview
Southwest Airlines (LUV) is a large-cap company in the Passenger Airlines industry, part of the Industrials sector of the S&P 500, with a market value around $24.56B.
In its latest reported year it generated about $28.06B in revenue and $441.00M in net profit.
Our model rates LUV Neutral (56/100) on growth, profitability, financial health, and valuation. The summary below is built from its filed financials and current ratios and refreshes automatically.
Economic Moat
Evidence of durable competitive advantage in the filed financials (10 years of history).
Profit margins and economic moats, explainedThe numbers don't show a durable competitive advantage — margins, growth, or returns on capital have been unstable or thin. Great returns are still possible; they just aren't protected.
1.2% average over the last 3 years
±16.5 pts around 3.8% across 10 years
grew in 8 of the last 9 year-over-year periods
positive in 5 of 10 years
3.0% latest fiscal year
A moat can't be proven by numbers alone — this scores the evidence a durable advantage leaves behind (pricing power, consistency, returns on capital), computed the same way for every stock. Pair it with the business overview before concluding anything.
Technical Analysis (Educational)
Technical analysis reads price and volume to judge momentum and timing. It complements the fundamentals above — it does not replace them. Here is what LUV's chart says today, with each tool explained.
Trend — moving averages. A moving average is the average closing price over a window, which smooths out daily noise. LUV trades near $39.90, below its 50-day average ($42.88) and 200-day average ($40.25). Price below both averages is a downtrend — momentum is against buyers for now.
Momentum — RSI. The Relative Strength Index runs 0–100 and measures how strong recent gains are versus losses. Above 70 is "overbought", below 30 "oversold". At 77 it is overbought — the recent rally is stretched and can cool off.
MACD. MACD compares two moving averages to flag shifts in momentum. Its histogram is currently positive — short-term momentum is improving.
Volatility — ATR. Average True Range is the typical daily move. LUV's is $1.95 (~4.9% of price), so swings of about that size each day are normal — handy for setting a stop that isn't too tight.
Support & resistance. In the month to Jul 6, 2026, LUV found buyers near $40.83 (support) and sellers near $53.13 (resistance); its 52-week range then was $28.98–$55.11. A decisive break beyond either edge often marks the next move.
Volume. The latest session traded 0.7× the 20-day average — lighter than usual, so the move carries less conviction. Rising volume on up-days suggests real buying; on down-days, real selling.
Educational information to help you read a chart — not a recommendation or a forecast. The indicators were last computed on Jul 6, 2026; the price is current.
Revenue Growth
4Y CAGR
15.5%
Revenue moved from $20.29B in 2016 to $28.06B in 2025, a 3.7% compound annual growth rate. The most recent year was roughly flat (4.7%) year over year. Slower, mature growth is common for established businesses.
Profitability
Gross Margin
73.8%
Operating Margin
1.5%
Net Margin
1.6%
ROE
10.7%
Southwest Airlines keeps about 2.8% of each sales dollar as net profit, with a 73.8% gross margin and 1.5% operating margin. Return on equity is 10.7% and return on invested capital about 3.0%. Thin margins leave less cushion if costs rise.
Debt Analysis
Total Debt
$4.93B
Net Debt
$1.14B
Net Debt / EBITDA
2.66x
Debt / Equity
0.61x
Leverage: debt-to-equity is 0.6x, and operating profit covers interest about 3.6x, with a current ratio of 0.5x. That is a moderate, manageable debt load for most businesses. It carries roughly $4.93B of total debt against $3.79B of cash.
Cash Flow Analysis
Operating CF
$1.84B
Free Cash Flow
-$831.00M
FCF Margin
-3.0%
In the latest year Southwest Airlines produced about $1.84B of operating cash flow but negative free cash flow as it invested heavily. That is a free-cash-flow yield of about 6.7% on today's price. Strong cash generation funds dividends, buybacks, and reinvestment.
Dividend Safety
Can the payout survive a bad year? Scored from filed cash flow, earnings coverage, and the raise/cut record.
What to look for in a dividend stockCoverage is weak, the payout was cut recently, or it's being financed rather than earned — treat the current yield as fragile.
Dividend yield
1.6%
Per share (latest FY)
$0.72
Total paid (latest FY)
$399.00M
History on record
8 years
free cash flow was negative in the latest year — the dividend is being financed
90% of net income paid out
no current raise streak
payout was cut at least once in the last 8 years
Coverage uses the latest fiscal year as filed with the SEC; the streak counts total dollars paid (per-share figures can carry split artifacts). Educational information, not income advice.
Valuation Analysis
P/E
23.98x
P/S
0.83x
P/B
2.25x
EV / EBITDA
—
LUV trades at 24.0x trailing earnings (about 17.1x on estimated forward earnings), 0.8x sales, and 2.3x book value. That is a fairly typical valuation for a profitable company.
Metrics vs. Sector Range
Where LUV sits versus the Industrials companies we cover.
Bands show the middle half (25th–75th percentile) of the 144 Industrials companies in our coverage that have fundamentals data — the peer-relative anchor professional comps analysis uses. Context only — not investment advice.
Sector Peer Comparison
How LUV stacks up against its Industrials peers — valuation, profitability, and growth versus the sector median.
Among the 142 rated Industrials companies we cover, LUV ranks #52 by our overall rating. It trades at a discount versus the sector on earnings (24x P/E vs. 30.5x median) with a lower return on equity (10.7% vs. 18.1%) and slower revenue growth (4.7% vs. 6.0%).
P/E vs sector
24x
median 30.5x
ROE vs sector
10.7%
median 18.1%
Growth vs sector
4.7%
median 6.0%
Sector rank
#52
of 142 rated
Valuation vs. quality map
The sweet spot is upper-left: more profitable (higher ROE) for a lower P/E. Dashed lines mark the sector median.
Peers are the closest Industrials companies by sub-industry and size, preferring ones with full data. Sector medians and rank use the 142 rated companies among the 273 Industrials stocks we cover. Educational, not a recommendation.
5-Year Projection Model
Project revenue → earnings → price. Edit the assumptions to build your own case.
What drives this projection, and its limits2030 scenario price range (Base Case)
$24.44 – $41.89
vs. $39.90 today · implied CAGR -9% – 1%
| Metric | 2026 | 2027 | 2028 | 2029 | 2030 |
|---|---|---|---|---|---|
| Revenue | $29.47B | $30.94B | $32.49B | $34.11B | $35.82B |
| Net income | $883.98M | $928.18M | $974.59M | $1.02B | $1.07B |
| EPS | $1.44 | $1.51 | $1.58 | $1.66 | $1.75 |
| Share price (low) | $20.10 | $21.11 | $22.17 | $23.27 | $24.44 |
| Share price (high) | $34.47 | $36.19 | $38.00 | $39.90 | $41.89 |
| CAGR (low–high) | -50% / -14% | -27% / -5% | -18% / -2% | -13% / -0% | -9% / 1% |
Educational scenario model, not a forecast or investment advice. It starts from the latest annual revenue in SEC filings. By default, growth is trailing revenue growth (held between 3% and 45% a year), the net margin is the latest one (held between 3% and 50%, so a loss-making company is modeled with a small profit), and the Base case P/E runs from 60% to 100% of today's. Carrying recent growth forward five years can miss badly in either direction. Outputs are only as good as the assumptions.
Bull Case
The case for LUV:
- Healthy free-cash-flow yield (~6.7%) funds buybacks and dividends.
- As an established S&P 500 member in Industrials, it brings scale and a long operating history.
Bear Case
The case against LUV:
- Thin net margins (2.8%) leave little room for error.
- Like any single stock, it is exposed to competition, the economic cycle, and shifts in its end markets.
Key Risks
Margin risk — thin profitability (2.8%) is vulnerable to cost or pricing pressure.
Market risk — sector rotation, the economic cycle, and broad sentiment move the stock regardless of fundamentals.
Investment Thesis
On balance, the picture is mixed: Southwest Airlines is a large-cap industrials business growing at a mature pace, with modest profitability, and a sound balance sheet. It trades at 24.0x earnings, which our model scores Neutral (56/100). Weigh this against your own goals and time horizon — this is educational information, not a recommendation.
Analyst Ratings
What 30 Wall Street analysts covering LUV recommend (September 2026). Consensus is a useful sanity check — not a substitute for your own homework.
Latest SEC Filings
LUV's most recent filings, straight from SEC EDGAR. Annual and quarterly reports are the deep dives; 8-Ks flag material events the moment they happen. How to read a 10-K
In the Idea Lab
LUV — frequently asked questions
Is LUV a good stock to buy?
We don't give buy or sell advice. Our model rates Southwest Airlines Neutral (56/100) based on its growth, profitability, financial health, and valuation — use that as a research starting point and make your own decision.
What is LUV's rating on The Stocks School?
Southwest Airlines currently scores 56/100 (Neutral) on our transparent model, which weighs real fundamentals: growth, margins, returns on capital, balance-sheet strength, and valuation.
How our ratings work →Where does LUV's data come from?
Live price data plus real fundamentals and 5-year financials pulled directly from Southwest Airlines's SEC filings — refreshed automatically, not hand-entered.
How is the 5-year projection for LUV calculated?
It's a scenario model. It starts from the latest annual revenue and net margin in SEC filings, grows revenue at an assumed rate (trailing revenue growth by default), and applies a P/E range built around today's multiple to show the resulting share-price range. When a stock has no growth or P/E data, the starting values are placeholders. It's a tool for thinking, not a prediction.
Is this LUV analysis financial advice?
No. Everything on this page is educational research, not financial advice or a recommendation to buy or sell LUV. Always do your own research and consider a licensed professional.
Data notice. Fundamentals and financial statements are sourced from company filings (SEC EDGAR) and market-data providers; prices and market caps refresh on trading days and may be delayed. Ratings, projections, technical signals, and written summaries are model- or rule-generated for education and may simplify or lag the latest filings.
Not advice. Nothing on this page is investment advice or a recommendation to buy, hold, or sell any security. Do your own research and consult a licensed financial professional before investing.