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Southwest Airlines Co LUV

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Stock XNYS Rating as of
$28.15 +0.10 (0.36%)
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As of Cboe BZX Real-Time Price Open
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Company Report

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Southwest Airlines: Activist Calling for Turnaround Announces 11% Stake; Holding Fair Value for Now

Nicolas Owens

On June 10, Elliott Investment Management published a letter to Southwest Airlines' board of directors calling for a new board, new management, and an operational turnaround for the beleaguered carrier while disclosing it had accumulated a $1.9 billion or approximately 11% ownership stake in the no-moat company. Pending further action by the board or other stakeholders, we have not altered our fair value estimate.

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Price vs Fair Value

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LUV is trading at a 176% premium.
Price
$28.05
Fair Value
$34.00
Uncertainty
High
1-Star Price
$85.82
5-Star Price
$58.40
Economic Moat
Klftd
Capital Allocation
Xskhppz

Bulls Say, Bears Say

Bulls

Southwest operates a leisure-focused low-cost carrier, which is well-positioned for a leisure-led post-pandemic recovery in aviation.

Bears

Major 2022 holiday travel disruptions put a spotlight on Southwest's antiquated operating systems. A necessary system overhaul could reduce the firm's near- to midterm profit margin and free cash flow.

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News

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Trading Information

Previous Close Price
$28.05
Day Range
$28.08–28.76
52-Week Range
$21.92–39.52
Bid/Ask
$28.15 / $28.16
Market Cap
$16.85 Bil
Volume/Avg
4.1 Mil / 10.3 Mil

Key Statistics

Price/Earnings (Normalized)
18.75
Price/Sales
0.67
Dividend Yield (Trailing)
2.57%
Dividend Yield (Forward)
2.57%
Total Yield
2.57%

Company Profile

Southwest Airlines is the largest domestic air carrier in the United States by passengers boarded. Southwest operates over 800 aircraft in an all-Boeing 737 fleet. Despite offering some longer routes and a few perks for business travelers, the airline predominantly specializes in short-haul, leisure flights operated in a single, open-seating cabin configuration in a point-to-point network.
Sector
Industrials
Industry
Airlines
Stock Style Box
Mid Core
Total Number of Employees
74,695
Website
https://www.southwest.com

Competitors

Valuation

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Metric
LUV
AAL
DAL
Price/Earnings (Normalized)
 18.755.017.65
Price/Book Value
 1.63—2.85
Price/Sales
 0.670.150.54
Price/Cash Flow
 9.243.064.79
Price/Earnings
LUV
AAL
DAL

Financial Strength

Metric
LUV
AAL
DAL
Quick Ratio
 0.970.440.29
Current Ratio
 1.090.620.41
Interest Coverage
 0.741.258.69
Quick Ratio
LUV
AAL
DAL

Profitability

Metric
LUV
AAL
DAL
Return on Assets (Normalized)
 2.62%1.90%5.85%
Return on Equity (Normalized)
 9.01%—47.04%
Return on Invested Capital (Normalized)
 3.46%6.45%13.54%
Return on Assets
LUV
AAL
DAL
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Price
Morningstar Rating for Stocks
Capital Allocation
Economic Moat
Market Cap
Delta Air Lines Inc
DAL
BkqvhklTdhx$31.8 Bil
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RYAAY
—Cklslx$21.1 Bil
 United Airlines Holdings Inc
UAL
WzqrnxmpPxy$17.1 Bil
 Singapore Airlines Ltd
SINGF
—Fbsgp$14.9 Bil
 Singapore Airlines Ltd ADR
SINGY
—Dnf$14.9 Bil
 Air China Ltd ADR
AIRYY
—Sfd$14.8 Bil
 Air China Ltd Class H
AICAF
—Bkh$14.7 Bil
 China Southern Airlines Co Ltd Class H
CHKIF
—Sysv$13.0 Bil
 American Airlines Group Inc
AAL
QqggntdrQdhq$7.4 Bil

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