Southwest Airlines Valuation
Is LUV undervalued compared to its fair value, analyst forecasts and its price relative to the market?
Valuation Score
3/6Valuation 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.
| What is LUV's n/a Ratio? | |
|---|---|
| n/a Ratio | 0x |
| n/a | n/a |
| Market Cap | US$17.32b |
| Key Statistics | |
|---|---|
| Enterprise Value/Revenue | 0.6x |
| Enterprise Value/EBITDA | 7.1x |
| PEG Ratio | 1.3x |
Price to Earnings Ratio vs Peers
How does LUV's PE Ratio compare to its peers?
| Company | PE | Estimated Growth | Market Cap |
|---|---|---|---|
| Peer Average | 31.6x | ||
UAL United Airlines Holdings | 8.3x | 13.6% | US$15.9b |
DAL Delta Air Lines | 12.6x | 19.5% | US$23.8b |
AAL American Airlines Group | 5.5x | 23.7% | US$9.7b |
ALK Alaska Air Group | 99.9x | 37.5% | US$5.9b |
LUV Southwest Airlines | 27.2x | 20.9% | 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?
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.
| Fair Ratio | |
|---|---|
| Current PE Ratio | 27.2x |
| Fair PE Ratio | 17.6x |
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?
| Date | Share Price | Average 1Y Price Target | Dispersion | High | Low | 1Y Actual price | Analysts |
|---|---|---|---|---|---|---|---|
| Current | US$30.07 | US$40.45 +34.5% | 18.2% | US$63.00 | US$32.00 | n/a | 18 |
| May ’24 | US$30.59 | US$42.57 +39.2% | 22.3% | US$64.00 | US$32.00 | n/a | 18 |
| Apr ’24 | US$32.54 | US$44.79 +37.6% | 20.3% | US$64.00 | US$32.00 | n/a | 18 |
| Mar ’24 | US$33.65 | US$45.72 +35.9% | 17.8% | US$64.00 | US$35.00 | n/a | 18 |
| Feb ’24 | US$35.63 | US$45.94 +28.9% | 17.4% | US$64.00 | US$35.00 | n/a | 18 |
| Jan ’24 | US$33.67 | US$49.44 +46.9% | 17.0% | US$68.00 | US$39.00 | n/a | 18 |
| Dec ’23 | US$40.08 | US$49.94 +24.6% | 16.9% | US$66.00 | US$39.00 | n/a | 17 |
| Nov ’23 | US$36.94 | US$49.18 +33.1% | 18.0% | US$66.00 | US$39.00 | n/a | 17 |
| Oct ’23 | US$30.84 | US$50.78 +64.6% | 16.5% | US$66.00 | US$39.00 | n/a | 18 |
| Sep ’23 | US$36.63 | US$52.32 +42.8% | 14.0% | US$65.00 | US$40.00 | n/a | 19 |
| Aug ’23 | US$38.31 | US$52.61 +37.3% | 15.1% | US$70.00 | US$40.00 | n/a | 18 |
| Jul ’23 | US$36.73 | US$57.96 +57.8% | 14.3% | US$72.00 | US$40.00 | n/a | 17 |
| Jun ’23 | US$44.15 | US$56.91 +28.9% | 15.4% | US$72.00 | US$34.00 | US$29.11 | 20 |
| May ’23 | US$46.72 | US$56.10 +20.1% | 17.1% | US$72.00 | US$34.00 | US$30.59 | 20 |
| Apr ’23 | US$45.91 | US$53.90 +17.4% | 17.6% | US$67.00 | US$30.00 | US$32.54 | 20 |
| Mar ’23 | US$41.95 | US$54.80 +30.6% | 17.2% | US$67.00 | US$28.00 | US$33.65 | 20 |
| Feb ’23 | US$45.18 | US$54.80 +21.3% | 17.2% | US$67.00 | US$28.00 | US$35.63 | 20 |
| Jan ’23 | US$42.84 | US$57.90 +35.2% | 14.4% | US$70.00 | US$36.00 | US$33.67 | 21 |
| Dec ’22 | US$42.55 | US$62.29 +46.4% | 10.2% | US$75.00 | US$48.00 | US$40.08 | 21 |
| Nov ’22 | US$49.13 | US$63.70 +29.7% | 10.1% | US$75.00 | US$48.00 | US$36.94 | 20 |
| Oct ’22 | US$54.35 | US$65.85 +21.2% | 6.6% | US$76.00 | US$55.00 | US$30.84 | 20 |
| Sep ’22 | US$49.55 | US$66.52 +34.3% | 6.9% | US$80.00 | US$57.00 | US$36.63 | 21 |
| Aug ’22 | US$50.52 | US$66.75 +32.1% | 8.1% | US$85.00 | US$57.00 | US$38.31 | 20 |
| Jul ’22 | US$53.86 | US$69.65 +29.3% | 6.9% | US$85.00 | US$64.00 | US$36.73 | 20 |
| Jun ’22 | US$61.35 | US$69.16 +12.7% | 5.8% | US$80.00 | US$64.00 | US$44.15 | 19 |
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.