Southwest Airlines Company (LUV) Stock

Southwest Airlines Company trades at a P/E ratio of 63.66, which is above the market average of approximately 20. This premium valuation suggests investors expect above-average growth or the company has competitive advantages justifying the higher multiple. Looking ahead, the forward P/E of 15.31 is lower than the current P/E, indicating analysts expect earnings to grow over the next year. The PEG ratio of 0.28 suggests the stock may be undervalued relative to its growth rate.

With a beta of 1.17, Southwest Airlines Company is roughly as volatile as the market, moving in line with broad market trends. This moderate beta suggests the stock offers market-level returns without excessive volatility. The price-to-book ratio of 2.65 shows investors value the company above its book value, which often reflects intangible assets or growth prospects.

Southwest Airlines Company achieves a profit margin of 1.38%, meaning it retains $1.38 from every $100 in revenue after all expenses. This relatively low margin suggests the company operates in a competitive environment or high-cost industry where profitability is challenging. The operating margin of 0.50% reveals how efficiently the company runs its core business operations before interest and taxes. With ROE at 4.17% and ROA at 0.71%, the company achieves moderate returns on invested capital.

Southwest Airlines Company's revenue grew by 1.20% year-over-year, showing steady progress in growing the business. This positive trajectory indicates the company maintains competitive positioning in its markets. Earnings decreased by 9.10% year-over-year, reflecting the bottom-line impact of business performance. These growth metrics should be evaluated against AIRLINES industry averages for proper context.

Southwest Airlines Company offers a dividend yield of 1.81%, paying $0.72 per share annually. This modest yield below 2% suggests the company prioritizes growth investments over current income. While the dividend provides some return, investors are likely attracted more by capital appreciation potential than income generation. To receive the next dividend, shares must be purchased before the ex-dividend date of Dec 26, 2025.

The dividend sustainability can be assessed through the payout ratio - Southwest Airlines Company pays $0.72 per share in dividends against earnings of $0.64 per share, resulting in a payout ratio of 100.00%. This very high payout exceeding 90% raises sustainability concerns, as nearly all earnings go to dividends. Any earnings decline could force a dividend cut. The next dividend payment is scheduled for Jan 16, 2026.

Southwest Airlines Company has a market capitalization of $21.4B, classifying it as a large-cap stock ($10B-$200B). Large-caps are typically industry leaders with established business models, offering a balance of stability and growth potential. They often provide dividend income and are core holdings in institutional portfolios. With 517.15M shares outstanding, the company's ownership is relatively concentrated. As a participant in the AIRLINES industry, it competes with other firms in this sector.

Southwest Airlines Company's book value per share is $15.04, while the current stock price is $41.71, resulting in a price-to-book (P/B) ratio of 2.77. This reasonable premium to book value suggests the market values the company's earnings power and intangible assets appropriately. Most profitable companies trade between 1-3x book value. As a common stock, this represents equity ownership with voting rights.

22 analysts cover LUV with 27% recommending buy/strong buy ratings. Analyst predictions have mixed reliability - studies show consensus rarely beats market returns consistently. The bearish sentiment could create opportunity if analysts are wrong. The consensus target of $34.97 implies -16.2% downside, but targets are often adjusted to follow price moves rather than predict them.

Current analyst recommendations:2 Strong Buy, 4 Buy, 10 Hold, 3 Sell, 3 Strong Sell. The neutral stance suggests uncertainty or fair valuation at current levels.Remember that analyst opinions often lag price movements and can be influenced by investment banking relationships.