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Southwest Airlines Co. — Intrinsic Value & Fair Price

LUV
NYSEIndustrialsAirlines, Airports & Air ServicesCIK 0000092380southwest.comAbout LUV
Last close · Oct 16, 202639.50−1.33 (−3.26%)
Market cap$19.3B
Model value · P/E · peers
49.29
Southwest Airlines closed at $39.50 — undervalued by 20% vs model.
43.17the model's range66.32

P/E · peers leads because DCF · Perpetuity growth · 5y could not lead: the cash-flow gate is shut (an operating loss, or three years of free cash flow summing below zero). From its peers' median P/E.

Other models
7.67 – 71.89
Wall St. target
51.00 23% below
Below model, 1y
17 of 20 days

Price and model value

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What the marks mean
Daily close

Dividends

Quarterly · as of Oct 16, 2026
Yield, trailing 12 months
1.82%
Past 2 years
low 1.31%high 3.00%
Dividends per share, a year at a time
$0.72Sep ’23$0.72Sep ’24$0.72Sep ’25$0.72TTM
Coverage
—
Raised
—
Growth, 3 yrs
0.0% a year
Last change
—
Every payment, with ex-dates · latest $0.18, paid Sep 24, 2026

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How it is valued

Valued asCyclical
Low/slowing growth (~4% recent)Decelerated from ~25% 5y CAGRThin margins (1.6% net margin)Pays dividendsHighly cyclical earningsNegative free cash flow
What growth the price implies: the reverse DCF

Key figures

FY2025 · chosen for cyclical companies
P/E
50.0×
EV / EBITDA
9.4×
FCF yield
-3.9%
Dividend yield, TTM
1.82%
Beta
1.16
Cost of capital (WACC)
8.51%
Full financials

Analyst actions

third-party, quoted
10-16UBS · target52.00
10-07Raymond James · target55.00
09-28BMO Capital · target50.00
09-18Rothschild & Co · “Neutral” from “Sell”upgrade
Ratings, targets and estimates

Comparable companies

by business, not by industry label

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About Southwest Airlines

Southwest Airlines Co. functions as a passenger airline, offering scheduled air travel services predominantly across the United States and to select neighboring international markets. As of December 31, 2021, the company maintained a consistent fleet of 728 Boeing 737 aircraft. Its extensive route network served 121 different locations, spanning 42 U.S. states, the District of Columbia, and the Commonwealth of Puerto Rico, along with 10 international countries close by. These international destinations include Mexico, Jamaica, the Bahamas, Aruba, the Dominican Republic, Costa Rica, Belize, Cuba, the Cayman Islands, and Turks and Caicos. To enhance the passenger journey, Southwest provides in-flight entertainment and internet access on its Wi-Fi-enabled planes. The airline also runs the Rapid Rewards loyalty program, enabling members to accumulate points proportional to the money spent on Southwest's base fares. For customer convenience in travel planning, the company offers a range of digital tools, including its official websites and mobile applications, as well as SWABIZ, a dedicated online booking platform for business clients. Additional services available include EarlyBird Check-In, preferred boarding options, and transportation for pets and unaccompanied minors. The company was founded in 1967 and its corporate headquarters are situated in Dallas, Texas.

CEO
Robert E. Jordan
Headquarters
Dallas, TX
Employees
73,456
IPO
1980-01-02
Full company profile

Model estimates for research reference only, not investment advice. Every model rests on assumptions that may not match what happens; the formulas are in how we value a stock.