We’ve recently updated our valuation analysis.

Southwest Airlines Valuation

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

Valuation Score

3/6

Valuation Score 3/6

  • Price-To-Earnings vs Peers

  • Price-To-Earnings vs Industry

  • Price-To-Earnings vs Fair Ratio

  • Below Fair Value

  • Significantly Below Fair Value

  • Analyst Forecast

Key Valuation Metric

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

Other financial metrics that can be useful for relative valuation.

LUV 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/Revenue0.6x
Enterprise Value/EBITDA7.1x
PEG Ratio1.3x

Price to Earnings Ratio vs Peers

How does LUV's PE Ratio compare to its peers?

The above table shows the PE ratio for LUV vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
CompanyPEEstimated GrowthMarket Cap
Peer Average31.6x
UAL United Airlines Holdings
8.3x13.6%US$15.9b
DAL Delta Air Lines
12.6x19.5%US$23.8b
AAL American Airlines Group
5.5x23.7%US$9.7b
ALK Alaska Air Group
99.9x37.5%US$5.9b
LUV Southwest Airlines
27.2x20.9%US$17.9b

Price-To-Earnings vs Peers: LUV is good value based on its Price-To-Earnings Ratio (26.3x) compared to the peer average (30.8x).


Price to Earnings Ratio vs Industry

How does LUV's PE Ratio compare vs other companies in the Global Airlines Industry?

0 CompaniesPrice / EarningsEstimated GrowthMarket Cap
Industry Avg.n/a24.2%
n/an/an/a
No. of CompaniesPE048121620

Fetching data

0 CompaniesPrice / EarningsEstimated GrowthMarket Cap
Industry Avg.n/a24.2%
n/an/an/a
No more companies

Price-To-Earnings vs Industry: LUV is expensive based on its Price-To-Earnings Ratio (26.3x) compared to the Global Airlines industry average (13.2x)


Price to Earnings Ratio vs Fair Ratio

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

LUV PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio27.2x
Fair PE Ratio17.6x

Price-To-Earnings vs Fair Ratio: LUV is expensive based on its Price-To-Earnings Ratio (27.2x) compared to the estimated Fair Price-To-Earnings Ratio (17.7x).


Share Price vs Fair Value

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

Below Fair Value: LUV ($29.11) is trading below our estimate of fair value ($53.45)

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


Analyst Price Targets

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

The above table shows the analyst LUV forecast and predictions for the stock price in 12 month’s time.
DateShare PriceAverage 1Y Price TargetDispersionHighLow1Y Actual priceAnalysts
CurrentUS$30.07
US$40.45
+34.5%
18.2%US$63.00US$32.00n/a18
May ’24US$30.59
US$42.57
+39.2%
22.3%US$64.00US$32.00n/a18
Apr ’24US$32.54
US$44.79
+37.6%
20.3%US$64.00US$32.00n/a18
Mar ’24US$33.65
US$45.72
+35.9%
17.8%US$64.00US$35.00n/a18
Feb ’24US$35.63
US$45.94
+28.9%
17.4%US$64.00US$35.00n/a18
Jan ’24US$33.67
US$49.44
+46.9%
17.0%US$68.00US$39.00n/a18
Dec ’23US$40.08
US$49.94
+24.6%
16.9%US$66.00US$39.00n/a17
Nov ’23US$36.94
US$49.18
+33.1%
18.0%US$66.00US$39.00n/a17
Oct ’23US$30.84
US$50.78
+64.6%
16.5%US$66.00US$39.00n/a18
Sep ’23US$36.63
US$52.32
+42.8%
14.0%US$65.00US$40.00n/a19
Aug ’23US$38.31
US$52.61
+37.3%
15.1%US$70.00US$40.00n/a18
Jul ’23US$36.73
US$57.96
+57.8%
14.3%US$72.00US$40.00n/a17
Jun ’23US$44.15
US$56.91
+28.9%
15.4%US$72.00US$34.00US$29.1120
May ’23US$46.72
US$56.10
+20.1%
17.1%US$72.00US$34.00US$30.5920
Apr ’23US$45.91
US$53.90
+17.4%
17.6%US$67.00US$30.00US$32.5420
Mar ’23US$41.95
US$54.80
+30.6%
17.2%US$67.00US$28.00US$33.6520
Feb ’23US$45.18
US$54.80
+21.3%
17.2%US$67.00US$28.00US$35.6320
Jan ’23US$42.84
US$57.90
+35.2%
14.4%US$70.00US$36.00US$33.6721
Dec ’22US$42.55
US$62.29
+46.4%
10.2%US$75.00US$48.00US$40.0821
Nov ’22US$49.13
US$63.70
+29.7%
10.1%US$75.00US$48.00US$36.9420
Oct ’22US$54.35
US$65.85
+21.2%
6.6%US$76.00US$55.00US$30.8420
Sep ’22US$49.55
US$66.52
+34.3%
6.9%US$80.00US$57.00US$36.6321
Aug ’22US$50.52
US$66.75
+32.1%
8.1%US$85.00US$57.00US$38.3120
Jul ’22US$53.86
US$69.65
+29.3%
6.9%US$85.00US$64.00US$36.7320
Jun ’22US$61.35
US$69.16
+12.7%
5.8%US$80.00US$64.00US$44.1519

Analyst Forecast: Target price is more than 20% higher than the current share price, but analysts are not within a statistically confident range of agreement.


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