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Southwest Airlines Co LUV

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Stock XNYS Rating as of
$27.23 −0.85 (3.03%)
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As of Delayed Price Closed
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Company Report

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Southwest Earnings: Cost-Cutting and Adapting to the Customer Might Work; Fair Value Up by $4 to $23

Nicolas Owens

On July 25, Southwest released second-quarter 2024 results that mostly resembled our forecasts, which we had recently updated to reflect how delivery delays from Boeing are crimping its growth plans while stiff price competition is damaging the airline's profitability. We saw evidence of cost-cutting in the quarter as salaries, maintenance, and capital expenditures came in shy of our second-quarter estimates.

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Price vs Fair Value

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LUV is trading at a 65% premium.
Price
$27.23
Fair Value
$18.00
Uncertainty
High
1-Star Price
$15.12
5-Star Price
$94.10
Economic Moat
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Capital Allocation
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Bulls Say, Bears Say

Bulls

Southwest is adapting to customer preferences for premium seats, which could increase revenue yield and its profitability, which has suffered recently.

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
$28.08
Day Range
$27.03–28.13
52-Week Range
$21.91–35.18
Bid/Ask
$27.16 / $27.19
Market Cap
$16.30 Bil
Volume/Avg
13.1 Mil / 10.2 Mil

Key Statistics

Price/Earnings (Normalized)
17.24
Price/Sales
0.65
Dividend Yield (Trailing)
2.64%
Dividend Yield (Forward)
2.64%
Total Yield
2.64%

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. In 2025, Southwest will modify its cabins to offer some seats with extra legroom and will update its ticketing process to offer assigned seats.
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)
 17.247.477.21
Price/Book Value
 1.56—2.30
Price/Sales
 0.650.140.47
Price/Cash Flow
 10.643.804.40
Price/Earnings
LUV
AAL
DAL

Financial Strength

Metric
LUV
AAL
DAL
Quick Ratio
 0.970.430.28
Current Ratio
 1.090.600.40
Interest Coverage
 0.740.718.14
Quick Ratio
LUV
AAL
DAL

Profitability

Metric
LUV
AAL
DAL
Return on Assets (Normalized)
 2.62%1.06%5.48%
Return on Equity (Normalized)
 9.01%—39.07%
Return on Invested Capital (Normalized)
 3.46%5.22%12.69%
Return on Assets
LUV
AAL
DAL
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Airlines Industry Comparables

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Name
Price
Morningstar Rating for Stocks
Capital Allocation
Economic Moat
Market Cap
Delta Air Lines Inc
DAL
ZmzygbzBsjk$28.5 Bil
 Ryanair Holdings PLC ADR
RYAAY
—Mkprkqf$18.2 Bil
 Ryanair Holdings PLC
RYAOF
—Rqmkwy$18.2 Bil
 United Airlines Holdings Inc
UAL
TlbjgpmNqfx$15.6 Bil
 Singapore Airlines Ltd
SINGF
—Fknr$15.4 Bil
 Singapore Airlines Ltd ADR
SINGY
—Xqb$15.4 Bil
 Air China Ltd ADR
AIRYY
—Smw$13.8 Bil
 LATAM Airlines Group SA ADR
LTM
—Bys$7.5 Bil
 American Airlines Group Inc
AAL
VbjtrjnVklyq$7.0 Bil

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