Southwest Airlines Co.

NYSE:LUV Stock Report

Market Cap: US$19.4b

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

  • 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 LUV when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: LUV ($31.77) is trading below our estimate of fair value ($238.14)

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

Key Valuation Metric

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

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

The above table shows the Price to Sales ratio for LUV. This is calculated by dividing LUV's market cap by their current revenue.
What is LUV's PS Ratio?
PS Ratio0.7x
SalesUS$27.38b
Market CapUS$19.41b

Price to Sales Ratio vs Peers

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

The above table shows the PS ratio for LUV vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
CompanyForward PSEstimated GrowthMarket Cap
Peer Average0.5x
UAL United Airlines Holdings
0.6x5.2%US$31.0b
AAL American Airlines Group
0.2x4.3%US$9.4b
DAL Delta Air Lines
0.7x2.1%US$41.5b
ALK Alaska Air Group
0.6x15.0%US$6.7b
LUV Southwest Airlines
0.7x4.4%US$19.4b

Price-To-Sales vs Peers: LUV is expensive based on its Price-To-Sales Ratio (0.7x) compared to the peer average (0.5x).

Price to Sales Ratio vs Industry

How does LUV's PS Ratio compare vs other companies in the US Airlines Industry?

7 CompaniesPrice / SalesEstimated GrowthMarket Cap
MESA Mesa Air Group
0.07xn/aUS$35.74m
SAVE.Q Spirit Airlines
0.003x2.9%US$16.44m
SOAR Volato Group
0.1xn/aUS$13.88m
TAWN.F Thai Airways International
0.0008xn/aUS$10.91m
LUV 0.7xIndustry Avg. 0.5xNo. of Companies7PS00.40.81.21.62+
7 CompaniesEstimated GrowthMarket Cap
No more companies

Price-To-Sales vs Industry: LUV is expensive based on its Price-To-Sales Ratio (0.7x) compared to the North American Airlines industry average (0.5x).

Price to Sales Ratio vs Fair Ratio

What is LUV'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.

LUV PS Ratio vs Fair Ratio.
Fair Ratio
Current PS Ratio0.7x
Fair PS Ratio1.3x

Price-To-Sales vs Fair Ratio: LUV is good value based on its Price-To-Sales Ratio (0.7x) compared to the estimated Fair Price-To-Sales Ratio (1.3x).

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$31.77
US$29.76
-6.3%
16.1%US$39.00US$19.00n/a19
Nov ’25US$30.61
US$29.67
-3.1%
16.8%US$39.00US$19.00n/a17
Oct ’25US$29.88
US$26.42
-11.6%
19.2%US$35.00US$19.00n/a17
Sep ’25US$28.92
US$25.32
-12.5%
17.1%US$33.00US$19.00n/a16
Aug ’25US$26.36
US$25.44
-3.5%
17.0%US$33.00US$19.00n/a16
Jul ’25US$28.11
US$26.36
-6.2%
16.8%US$37.00US$19.00n/a16
Jun ’25US$26.84
US$26.96
+0.5%
18.6%US$38.00US$19.00n/a18
May ’25US$25.67
US$27.07
+5.4%
18.5%US$38.00US$19.00n/a18
Apr ’25US$29.18
US$29.88
+2.4%
19.5%US$42.00US$19.00n/a19
Mar ’25US$33.96
US$29.56
-12.9%
21.8%US$42.00US$19.00n/a19
Feb ’25US$30.18
US$28.01
-7.2%
23.1%US$40.00US$15.00n/a19
Jan ’25US$28.88
US$26.53
-8.1%
26.6%US$47.00US$18.00n/a19
Dec ’24US$26.69
US$26.48
-0.8%
26.6%US$47.00US$18.00n/a19
Nov ’24US$22.23
US$28.16
+26.7%
25.2%US$47.00US$18.00US$30.6119
Oct ’24US$27.07
US$34.04
+25.7%
21.6%US$55.00US$20.00US$29.8819
Sep ’24US$31.42
US$36.26
+15.4%
18.9%US$55.00US$25.00US$28.9219
Aug ’24US$33.43
US$38.23
+14.4%
15.2%US$55.00US$30.00US$26.3618
Jul ’24US$36.21
US$40.95
+13.1%
17.4%US$60.00US$32.00US$28.1118
Jun ’24US$29.11
US$40.45
+39.0%
18.2%US$63.00US$32.00US$26.8418
May ’24US$30.59
US$42.57
+39.2%
22.3%US$64.00US$32.00US$25.6718
Apr ’24US$32.54
US$44.79
+37.6%
20.3%US$64.00US$32.00US$29.1818
Mar ’24US$33.65
US$45.72
+35.9%
17.8%US$64.00US$35.00US$33.9618
Feb ’24US$35.63
US$45.94
+28.9%
17.4%US$64.00US$35.00US$30.1818
Jan ’24US$33.67
US$49.44
+46.9%
17.0%US$68.00US$39.00US$28.8818
Dec ’23US$40.08
US$49.94
+24.6%
16.9%US$66.00US$39.00US$26.6917
Nov ’23US$36.94
US$49.18
+33.1%
18.0%US$66.00US$39.00US$22.2317

Analyst Forecast: Target price is lower than the current share price.

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