Southwest Airlines Co. (LUV) Stock

Southwest Airlines Co. trades at a P/E ratio of 51.19, 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 13.18 is lower than the current P/E, indicating analysts expect earnings to grow over the next year. The PEG ratio of 0.24 suggests the stock may be undervalued relative to its growth rate.

With a beta of 1.19, Southwest Airlines Co. 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 2.13 shows investors value the company above its book value, which often reflects intangible assets or growth prospects.

Southwest Airlines Co. achieves a profit margin of 1.43%, meaning it retains $1.43 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 3.11% reveals how efficiently the company runs its core business operations before interest and taxes. With ROE at 4.25% and ROA at 0.67%, the company achieves moderate returns on invested capital.

Southwest Airlines Co.'s revenue declined by 1.50% year-over-year, indicating challenges in maintaining sales momentum. This contraction may reflect market headwinds, competitive pressures, or strategic transitions. Earnings decreased by 32.60% 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 Co. offers a dividend yield of 2.21%, paying $0.72 per share annually. This above-average yield of 2-4% provides meaningful income while still allowing the company to reinvest for growth. It compares favorably to the S&P 500 average and offers competitive returns versus bonds in the current rate environment. To receive the next dividend, shares must be purchased before the ex-dividend date of Sep 3, 2025.

The dividend sustainability can be assessed through the payout ratio - Southwest Airlines Co. 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 Sep 24, 2025.

Southwest Airlines Co. has a market capitalization of $17.2B, 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 525.19M 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 Co.'s book value per share is $15.23, while the current stock price is $30.38, resulting in a price-to-book (P/B) ratio of 1.99. 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 $32.51 implies 7.0% upside, 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.