Southwest Airlines Co. (LUV) is a publicly traded company in the Industrials — Airlines, Airports & Air Services industry listed on NYSE. This overview shows the latest price, key valuation ratios, profitability metrics and financial-health indicators used by fundamental investors.
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.
Is Southwest Airlines Co. stock overvalued or undervalued in 2026?
Southwest Airlines Co. (LUV) trades at 20.4× earnings (P/E), against a median of 25.8× across the 297 industrials companies above $2bn in Kaplio's universe. It trades at 24.3 times its average earnings over ten years; between the 10 times Lynch paid for a cyclical and the 25 of Graham's limit for the defensive investor, it is fairly priced.
Kaplio overview: Southwest Airlines Co.
Market cap $21B · 52 weeks $30 – $55 (22 % below the high) · P/E 20.4× · 2027 expected P/E 10.6× · Dividend 1.7 % · Next earnings January 27, 2027 · expected EPS $0.70 · Closing price, Oct 30 · accounts published Oct 21.
- Valuation: P/E 20.4× (fairly priced).
- Business: ROIC 6 % (weak).
- Balance sheet: Net debt/EBITDA 1.4× (solid).
- Earnings: 6 of 8 (on track).
It trades at 24.3 times its average earnings over ten years; between the 10 times Lynch paid for a cyclical and the 25 of Graham's limit for the defensive investor, it is fairly priced.
What matters in industrials: 6 of 10 pass
- Operating margin 1.5 %, fails.
- ROIC 5.6 %, fails.
- FCF conversion −188.4 %, fails.
- Capex / Revenue 9.5 %, fails.
- 5y revenue growth 26.5 %, passes.
- Net debt / EBITDA 1.4×, passes.
- Altman Z-Score 2.2, passes.
- Piotroski F-Score 7 de 9, passes.
- P/E vs own 10y history 20.4×, passes.
- Cycle-adjusted EV/EBITDA 7.9×, passes.
Against its peers (reference peers) — Southwest Airlines Co.: P/E 20.4×; EV/EBITDA 7.9×; ROIC 5.6 %; $20.8B. Ryanair Holdings plc (P/E 12.8×; EV/EBITDA 6.0×; ROIC 17.8 %; $27.8B), United Airlines Holdings, Inc. (P/E 9.5×; EV/EBITDA 7.2×; ROIC 6.3 %; $33.9B), American Airlines Group Inc. (P/E —; EV/EBITDA 13.6×; ROIC 2.0 %; $8.3B).
Expensive or cheap against its last ten years?
P/E at each close: today 20.4× · median 17.7× · minimum 5.6× · maximum 69.8× · cheap below 12.4× · expensive above 37.1×. It has been cheaper than today 54% of the time over its last ten years.
Dividend
fragile · Yield 1.7 % ($0.74 per share in 2025) · Years raising it 1 · 5-year growth +4 % a year · Free cash flow coverage -2.2× · With $1,000 invested today you'd collect $17.00 a year ($1.42 a month).
Kaplio's reading: Southwest Airlines Co.
Updated on October 31, 2026 · accounts published on October 21, 2026
A thin-margin airline with recovering profits that is not
Southwest Airlines trades at a P/E of 20.4× over the last 12 months, 21 % below its sector median and 15 % above its own ten-year median.
- Is Southwest Airlines expensive or cheap? Its P/E of 20.4× is 21 % below the sector median but 15 % above its own ten-year median.
- How is the business doing? Operating margin recovered to 4.4 % over the last 12 months from 1.5 % in fiscal 2025, still below its 5.9 % average.
- How strong is the balance sheet? Net debt is 1.4× EBITDA in fiscal 2025, under the 3× limit, but the 1.7 % dividend took 90 % of earnings.
- What to expect from the next earnings? Results are due January 27, 2027, with $0.70 EPS expected, after the 2026 EPS consensus fell 13 % in 30 days.
- Does Southwest Airlines turn its margin into cash, and at what multiple of the cycle does it trade? Fiscal 2025 free cash flow was −188 % of net income, against a healthy level of 85 % or more for industrials.
Is Southwest Airlines expensive or cheap?
Over the last 12 months Southwest Airlines trades at a P/E of 20.4×, 21 % below the 25.8× median of its sector (297 companies). Against its own history the picture flips: the multiple is 15 % above its ten-year median of 17.7×, and the stock has traded at a lower P/E 54 % of the time in the last decade, in a range from 5.6× to 69.8×. EV/EBITDA of 7.9× is below its six-year average of 8.5×. After a 43 % rise over 12 months, the share is still 22 % below its 52-week high of $54.80.
How is the business doing?
Growth is slow: revenue rose 2.1 % and EPS 5.3 % over the last 12 months. The margin is the story. Operating margin reached 4.4 % over the last 12 months, up from 1.5 % in fiscal 2025 but still under the 5.9 % average of fiscal 2014-2025, and net margin is 3.3 %. ROIC of 5.6 % sits 3.5 points below the sector median of 9.1 %, and it topped 10 % in only 4 of the last 10 fiscal years, with a low of −10.0 % in 2020. A Piotroski score of 7 out of 9 points to improving fundamentals.
How strong is the balance sheet?
Leverage is moderate. Net debt was $5.30 per share in fiscal 2025, equal to 12.5 % of the current price, and 1.4× EBITDA, comfortably below the 3× considered healthy for industrials. Debt to equity is 0.94 over the last 12 months. Short-term liquidity is tighter: a current ratio of 0.47 means current liabilities are about twice current assets, and the Altman Z of 2.2 sits in the grey zone between 1.81 and 2.99. The 1.7 % dividend yield leaves little room, since the payout absorbed 90 % of fiscal 2025 earnings.
What to expect from the next earnings?
Southwest Airlines reports next on January 27, 2027, and analysts expect EPS of $0.70 for the quarter. The track record helps: it beat EPS estimates in 6 of the last 8 quarters, and on October 21, 2026 it posted $0.66 against $0.57 expected, a 16 % beat. Estimates are moving the other way. The 2026 EPS consensus fell 12.7 % in the last 30 days, from $3.17 to $2.77 (13 analysts), while the revenue consensus rose 1.1 %. Of 45 analysts, 19 rate it a buy, 22 a hold and 4 a sell.
Does Southwest Airlines turn its margin into cash, and at what multiple of the cycle does it trade?
Airlines belong to industrials, a semi-cyclical group where profits swing with the economy, so the test is how much margin becomes cash and what multiple the market pays across the cycle. Conversion fails here: fiscal 2025 free cash flow was −188 % of net income, against a healthy 85 % or more, with capex at 9.5 % of revenue, above the 4 % to 8 % range. Operating margin of 1.5 % in fiscal 2025 also misses the 12 % bar. On the multiple, the P/E of 20.4× is below its ten-year average of 23.1× and EV/EBITDA of 7.9× is below its six-year average of 8.5×.
How this was prepared: the data comes from companies' official filings, collected by a professional provider, and from Kaplio's analysis engine (trailing-12-month ratios, 10 years of history and sector medians computed across US-listed companies). The text is written from that data alone, every figure is checked against it before publication, and it is reviewed when the company reports results. This is not investment advice.
Investor methods verdict
Would Peter Lynch approve Southwest Airlines today?
The Lynch Method approves Southwest Airlines today. Business quality: 72 out of 100 (price not included). Lynch classifies it as a cyclical. Kaplio assessment with data from the week of 2026-10-26; not investment advice.
Profitability
| Return on Equity | 14.39% |
| Return on Invested Capital | 5.60% |
| Return on Assets | 3.45% |
| Gross Margin | 55.70% |
| Operating Margin | 4.39% |
| Net Margin | 3.34% |
Financial Health
| Debt / Equity | 0.94 |
| Current Ratio | 0.47 |
| Piotroski F-Score | 7 |
| Altman Z-Score | 2.22 |
Price Performance
| 1 month | -0.09% |
| 3 months | -9.86% |
| Year-to-date | +2.66% |
| 1 year | +40.03% |
| 3 years | +83.20% |
| 5 years | -13.25% |
| 10 years | +6.88% |
Dividend History
Paid in the last 12 months: $0.7200 per share in 4 payments.
| Date | Amount |
|---|---|
| 2026-09-03 | $0.1800 |
| 2026-06-11 | $0.1800 |
| 2026-03-12 | $0.1800 |
| 2025-12-26 | $0.1800 |
| 2025-09-03 | $0.1800 |
| 2025-06-18 | $0.1800 |
| 2025-03-12 | $0.1800 |
| 2024-12-26 | $0.1800 |
| 2024-09-04 | $0.1800 |
| 2024-06-18 | $0.1800 |
Amounts adjusted for stock splits.
Related companies: RYAAY · UAL · AAL · DAL · ALK
Explore sector: Industrials · Airlines, Airports & Air Services
More sections of LUV: Financials · Valuation · Statistics · Estimates · Technical · Ownership · News · Events
Discover more: Weekly Radar: the S&P 500 through the Buffett and Lynch methods · Companies that pass the Buffett method today · Companies that pass the Lynch method today · Stocks that pass Graham's defensive investor test today · Investment Academy — learn to analyze stocks