Southwest Airlines Valuation

Q: What is the Fair Price of S1OU34 when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

S1OU34 (R$164.56) is trading below our estimate of [[fair value]] (R$870.6)

Is S1OU34 undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

3/6

Valuation Score 3/6

Below Fair Value
Significantly Below Fair Value
Price-To-Sales vs Peers
Price-To-Sales vs Industry
Price-To-Sales vs Fair Ratio
Analyst Forecast

Share Price vs Fair Value

What is the Fair Price of S1OU34 when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: S1OU34 (R$164.56) is trading below our estimate of fair value (R$870.6)

Significantly Below Fair Value: S1OU34 is trading below fair value by more than 20%.

Key Valuation Metric

Which metric is best to use when looking at relative valuation for S1OU34?

Key metric: As S1OU34 is unprofitable we use its Price-To-Sales Ratio for relative valuation analysis.

The above table shows the Price to Sales ratio for S1OU34. This is calculated by dividing S1OU34's market cap by their current revenue.
What is S1OU34's PS Ratio?
PS Ratio	0.7x
Sales	US$27.38b
Market Cap	US$19.17b

S1OU34 key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue	0.7x
Enterprise Value/EBITDA	11.2x
PEG Ratio	n/a

Price to Sales Ratio vs Peers

How does S1OU34's PS Ratio compare to its peers?

The above table shows the PS ratio for S1OU34 vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
Company	Forward PS	Estimated Growth	Market Cap
Peer Average	1.1x
AZUL4 Azul	0.09x	10.5%	R$1.7b
GOLL4 Gol Linhas Aéreas Inteligentes	0.03x	9.7%	R$618.0m
RAIL3 Rumo	2.9x	9.6%	R$37.3b
RENT3 Localiza Rent a Car	1.3x	14.7%	R$46.9b
S1OU34 Southwest Airlines	0.7x	4.4%	R$19.2b

Price-To-Sales vs Peers: S1OU34 is good value based on its Price-To-Sales Ratio (0.7x) compared to the peer average (1.1x).

Price to Sales Ratio vs Industry

How does S1OU34's PS Ratio compare vs other companies in the Global Airlines Industry?

18 Companies	Price / Sales	Estimated Growth	Market Cap

18 Companies		Estimated Growth	Market Cap

No more companies

Price-To-Sales vs Industry: S1OU34 is expensive based on its Price-To-Sales Ratio (0.7x) compared to the Global Airlines industry average (0.6x).

Price to Sales Ratio vs Fair Ratio

What is S1OU34's PS Ratio compared to its Fair PS Ratio? This is the expected PS Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

S1OU34 PS Ratio vs Fair Ratio.
Fair Ratio
Current PS Ratio	0.7x
Fair PS Ratio	n/a

Price-To-Sales vs Fair Ratio: Insufficient data to calculate S1OU34's Price-To-Sales Fair Ratio for valuation analysis.

Analyst Price Targets

What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?

Analyst Forecast: Insufficient data to show price forecast.