A Business at a Glance
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SOUTHWEST AIRLINES CO
LUV
$25.2B
Mkt Cap
$45.08
+0.83%
SOUTHWEST AIRLINES CO (LUV) has a current P/E ratio of 57.1, compared to its historical median P/E of 24.4. The stock is currently considered Expensive based on its historical valuation range.
SOUTHWEST AIRLINES CO (LUV) has a 5-year average return on invested capital (ROIC) of 7.0%. This is below average and may indicate limited pricing power.
SOUTHWEST AIRLINES CO (LUV) has a market capitalization of $22.7B. It is classified as a large-cap stock.
Yes, SOUTHWEST AIRLINES CO (LUV) pays a dividend with a trailing twelve-month yield of 1.70%. The company also returns capital through share buybacks, with a buyback yield of 13.45%.
Based on historical P/E analysis, SOUTHWEST AIRLINES CO (LUV) appears expensive. The current P/E of 57.1 is 133% above its historical median of 24.4. The estimated fair value CAGR (P/E method) is -30.9%.
SOUTHWEST AIRLINES CO (LUV) operates in the Air Transportation, Scheduled industry, within the Industrials sector.
SOUTHWEST AIRLINES CO (LUV) reported annual revenue of $28.1 billion in its most recent fiscal year, based on SEC EDGAR filings.
Southwest Airlines operates a major U.S. passenger airline providing scheduled air transportation across the United States and near-international markets, serving 117 destinations in 42 states, the District of Columbia, Puerto Rico, and ten near-international countries as of December 31, 2025. The company employs a point-to-point route network model that enables direct nonstop routing rather than hub-and-spoke concentration, allowing for frequent, conveniently timed flights and competitive fares; 74% of customers fly nonstop, and the company offers high-frequency short-haul routes complemented by mid-range and long-haul nonstop service. Southwest's business model centers on cost discipline through use of a single aircraft type (Boeing 737), service from secondary and downtown airports with lower congestion, and high asset utilization; the company generates revenue from passenger fares across multiple fare products (including a new Basic economy tier), ancillary services such as checked bag fees and seat assignments, loyalty program activities, and vacation packages through its Getaways by Southwest product launched in August 2025. The company operates a fleet of 803 Boeing 737 aircraft as of December 31, 2025, and has modernized its customer experience through assigned seating, extra legroom offerings, redesigned boarding by seat location and fare bundle, 24-hour operations with redeye flights, and expanded distribution through third-party channels including Expedia, Priceline, Google Flights, Kayak, and Skyscanner. Labor costs represent the largest operating expense category at approximately 46.9% of operating expenses in 2025, while fuel and oil expense is the second largest; the company terminated its fuel hedging portfolio in the second quarter of 2025 to close its hedging program. Southwest's competitive moat derives from its efficient point-to-point network design, operational reliability (ranked number one in on-time performance and completion factor in December 2025), brand loyalty through its Rapid Rewards program, and ability to execute rapid product innovation and cost management initiatives.
【Significant margin expansion ahead】 Management expects 2026 to deliver dramatically higher earnings than 2025, with full-year adjusted EPS guidance of at least $4 compared to 2025 adjusted EPS of $0.93, driven by continued maturation and acceleration of revenue initiatives including assigned seating, extra legroom, and bag fees, combined with disciplined cost management and network optimization. The company expects to deliver more than $1 billion of incremental EBIT from assigned and extra legroom seating in 2026 and anticipate hitting full run rate of approximately $1.5 billion in 2027, with additional upside potential as booking curves fully develop through low and high seasons. First quarter 2026 RASM is expected to increase at least 9.5% year-over-year, with contributions from yield, load factor, initiatives, and loyalty programs, while capacity is expected to grow between 1% and 2% in Q1 despite operating with approximately 7 fewer aircraft due to continued efficiency gains. The company plans to keep management headcount expense flat to 2025 levels in 2026 while focusing on operational efficiency within frontline teams, and expects continued strong cost discipline with full-year net capital spending in the range of $3 billion to $3.5 billion, positioning Southwest to deliver significant margin expansion and earnings growth while maintaining its investment-grade balance sheet.
No forward guidance provided.
Generated solely from the company's own reports listed below — not from third-party data. Hallucination risk is low. · Sources: 10-K, Q4 FY2025 Earnings Call, Q3 FY2025 Earnings Call, Q2 FY2025 Earnings Call, Q1 FY2025 Earnings Call
| Metric | TTM | FY2025 | FY2024 | FY2023 | FY2022 | FY2021 |
|---|---|---|---|---|---|---|
| Revenue | 28.9B | 28.1B | 27.5B | 26.1B | 23.8B | 15.8B |
| Net Income | 818M | 442M | 485M | 484M | 561M | 977M |
| EPS | $1.29 | $0.79 | $0.76 | $0.76 | $0.87 | $1.61 |
| Free Cash Flow | -402M | -831M | -1.6B | -356M | -134M | 1.8B |
| ROIC | 8.6% | 3.5% | 3.0% | 2.2% | 11.2% | 15.2% |
| Gross Margin | - | 53.9% | 78.9% | 76.2% | 74.9% | 79.0% |
| Debt/Equity | 0.78 | 0.75 | 0.78 | 0.87 | 0.88 | 1.18 |
| Dividends/Share | $0.77 | $0.72 | $0.72 | $0.72 | $0.18 | $0.00 |
| Operating Income | 981M | 428M | 321M | 224M | 1.0B | 1.7B |
| Operating Margin | 3.4% | 1.5% | 1.2% | 0.9% | 4.3% | 10.9% |
| ROE | 11.9% | 4.8% | 4.6% | 4.6% | 5.3% | 10.1% |
| Shares Outstanding | 503M | 559M | 638M | 637M | 645M | 607M |
| Metric | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Income Statement | |||||||||||||
| Revenue | 18.6B | 19.8B | 20.4B | 21.2B | 22.0B | 22.4B | 9.0B | 15.8B | 23.8B | 26.1B | 27.5B | 28.1B | 28.9B |
| Gross Margin | 71.6% | 55.5% | 56.7% | 56.2% | 79.0% | 56.1% | 79.6% | 79.0% | 74.9% | 76.2% | 78.9% | 53.9% | N/A |
| R&D | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A |
| SG&A | 5.4B | 6.4B | 6.8B | 7.3B | 7.6B | 8.3B | 6.8B | 7.7B | 9.4B | 11.2B | 12.2B | 13.0B | 13.2B |
| EBIT | 2.2B | 4.1B | 3.5B | 3.4B | 3.2B | 3.0B | -3.8B | 1.7B | 1.0B | 224M | 321M | 428M | 981M |
| Op. Margin | 12.0% | 20.8% | 17.2% | 16.1% | 14.6% | 13.2% | -42.2% | 10.9% | 4.3% | 0.9% | 1.2% | 1.5% | 3.4% |
| Net Income | 1.1B | 2.2B | 2.2B | 3.4B | 2.5B | 2.3B | -3.1B | 977M | 561M | 484M | 485M | 442M | 818M |
| Net Margin | 6.1% | 11.0% | 10.7% | 15.9% | 11.2% | 10.3% | -34.0% | 6.2% | 2.4% | 1.9% | 1.8% | 1.6% | 2.8% |
| Non-Recurring | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 12M | 35M | 0 | 0 | 8.0M | 8.0M |
| Returns on Capital | |||||||||||||
| ROIC | 20.6% | 38.6% | 30.2% | 38.1% | 25.5% | 23.8% | -20.0% | 15.2% | 11.2% | 2.2% | 3.0% | 3.5% | 8.6% |
| ROE | 16.1% | 32.2% | 30.0% | 38.5% | 25.3% | 23.4% | -32.9% | 10.1% | 5.3% | 4.6% | 4.6% | 4.8% | 11.9% |
| ROA | 5.8% | 10.6% | 9.8% | 13.9% | 9.6% | 8.8% | -10.2% | 2.8% | 1.6% | 1.3% | 1.4% | 1.4% | 2.8% |
| Cash Flow | |||||||||||||
| Op. Cash Flow | 2.9B | 3.2B | 4.3B | 3.9B | 4.9B | 4.0B | -1.1B | 2.3B | 3.8B | 3.2B | 462M | 1.8B | 2.4B |
| Free Cash Flow | 1.2B | 1.2B | 2.3B | 1.8B | 3.0B | 3.0B | -1.6B | 1.8B | -134M | -356M | -1.6B | -831M | -402M |
| Owner Earnings | 1.9B | 2.2B | 3.0B | 2.7B | 3.6B | 2.7B | -2.4B | 992M | 2.4B | 1.6B | -1.2B | 183M | -14.1B |
| CapEx | 1.7B | 2.0B | 2.0B | 2.1B | 1.9B | 1.0B | 515M | 505M | 3.9B | 3.5B | 2.1B | 2.7B | 2.8B |
| Maint. CapEx | 938M | 1.0B | 1.2B | 1.2B | 1.2B | 1.2B | 1.3B | 1.3B | 1.4B | 1.5B | 1.7B | 1.6B | 16.4B |
| Growth CapEx | 810M | 1.0B | 817M | 905M | 721M | 0 | 0 | 0 | 2.6B | 2.0B | 397M | 1.1B | 0 |
| D&A | 938M | 1.0B | 1.2B | 1.2B | 1.2B | 1.2B | 1.3B | 1.3B | 1.4B | 1.5B | 1.7B | 1.6B | 16.4B |
| CapEx/OCF | 60.2% | 63.0% | 47.5% | 54.0% | 39.3% | 25.8% | N/A | 21.7% | 103.5% | 111.3% | 444.6% | 145.1% | 116.8% |
| Capital Allocation | |||||||||||||
| Dividends Paid | 139M | 180M | 222M | 274M | 332M | 372M | 188M | 0 | 0 | 428M | 430M | 399M | 385M |
| Dividend Yield | 0.8% | 0.7% | 0.9% | 0.9% | 1.1% | 1.4% | 0.9% | N/A | N/A | 2.3% | 2.4% | 2.2% | 1.7% |
| Share Buybacks | 955M | 1.2B | 1.8B | 1.6B | 2.0B | 2.0B | 451M | 0 | 0 | 0 | 250M | 2.5B | 3.0B |
| Buyback Yield | 3.7% | 4.5% | 6.1% | 4.5% | 8.1% | 7.4% | 1.9% | N/A | N/A | N/A | 1.2% | 11.0% | 13.5% |
| Stock-Based Comp | 23M | 24M | 33M | 37M | 46M | 55M | 17M | 58M | 84M | 86M | 45M | 99M | 95M |
| Debt Repayment | 561M | 213M | 523M | 592M | 342M | 615M | 839M | 293M | 648M | 0 | 0 | 0 | 0 |
| Balance Sheet | |||||||||||||
| Net Debt | -296M | 127M | 82M | 395M | -312M | -76M | 680M | -3.2B | -2.9B | -2.3B | -667M | 2.8B | 2.1B |
| Cash & Equiv. | 1.3B | 1.6B | 1.7B | 1.5B | 1.9B | 2.5B | 11.1B | 12.5B | 9.5B | 9.3B | 7.5B | 3.2B | 3.3B |
| Long-Term Debt | 2.4B | 2.5B | 2.8B | 3.3B | 2.8B | 1.8B | 10.1B | 10.3B | 8.0B | 8.0B | 5.1B | 4.6B | 4.5B |
| Debt/Equity | 0.40 | 0.47 | 0.44 | 0.38 | 0.34 | 0.41 | 1.58 | 1.18 | 0.88 | 0.87 | 0.78 | 0.75 | 0.78 |
| Interest Coverage | 17.1 | 34.0 | 28.9 | 29.9 | 24.5 | 25.1 | -173.5 | 90.6 | 3.0 | 44.8 | 1.3 | 2.6 | 89.2 |
| Equity | 6.8B | 6.8B | 7.8B | 9.6B | 9.9B | 9.8B | 8.9B | 10.4B | 10.7B | 10.5B | 10.3B | 8.0B | 6.9B |
| Total Assets | 19.7B | 21.3B | 23.3B | 25.1B | 26.2B | 25.9B | 34.6B | 36.3B | 35.4B | 36.5B | 33.8B | 29.1B | 29.4B |
| Total Liabilities | 12.9B | 14.6B | 15.5B | 15.5B | 16.4B | 16.1B | 25.7B | 25.9B | 24.7B | 26.0B | 23.4B | 21.1B | -79M |
| Intangibles | 363M | 464M | 426M | 413M | 400M | 296M | 295M | 295M | 296M | 296M | 300M | 296M | 296M |
| Retained Earnings | 7.4B | 9.4B | 11.4B | 13.8B | 16.0B | 17.9B | 14.8B | 15.8B | 16.3B | 16.3B | 16.3B | 16.4B | 16.5B |
| Working Capital | -2.0B | -3.4B | -2.3B | -2.0B | -2.9B | -3.0B | 7.7B | 8.9B | 4.4B | 1.7B | -1.0B | -5.3B | -6.5B |
| Current Assets | 3.9B | 4.0B | 4.5B | 4.8B | 5.0B | 6.0B | 15.2B | 18.0B | 14.8B | 14.0B | 11.3B | 5.6B | 6.0B |
| Current Liabilities | 5.9B | 7.4B | 6.8B | 6.9B | 7.9B | 9.0B | 7.5B | 9.2B | 10.4B | 12.3B | 12.3B | 10.9B | 12.5B |
| Per Share Data | |||||||||||||
| EPS | 1.64 | 3.27 | 3.45 | 5.57 | 4.29 | 4.27 | -5.44 | 1.61 | 0.87 | 0.76 | 0.76 | 0.79 | 1.29 |
| Owner EPS | 2.80 | 3.30 | 4.80 | 4.44 | 6.35 | 5.04 | -4.25 | 1.63 | 3.65 | 2.44 | -1.94 | 0.33 | -27.99 |
| Book Value | 9.78 | 10.14 | 12.30 | 16.00 | 17.15 | 18.25 | 15.71 | 17.16 | 16.57 | 16.51 | 16.22 | 14.26 | 13.67 |
| Cash Flow/Share | 4.19 | 4.85 | 6.78 | 6.52 | 8.52 | 7.40 | -1.99 | 3.83 | 5.88 | 4.97 | 0.72 | 3.29 | 34.20 |
| Dividends/Share | 0.22 | 0.29 | 0.38 | 0.48 | 0.61 | 0.70 | 0.33 | 0.00 | 0.18 | 0.72 | 0.72 | 0.72 | 0.77 |
| Shares Out. | 692.7M | 667.0M | 632.8M | 602.7M | 574.6M | 538.6M | 565.1M | 606.8M | 644.8M | 636.8M | 638.2M | 559.5M | 503.0M |
| Valuation | |||||||||||||
| P/E Ratio | 22.6 | 11.9 | 13.0 | 10.7 | 10.0 | 11.8 | N/A | 24.4 | 34.4 | 37.0 | 43.8 | 52.3 | 34.9 |
| P/FCF | 22.2 | 21.7 | 12.6 | 19.9 | 8.3 | 9.2 | N/A | 13.1 | N/A | N/A | N/A | N/A | N/A |
| EV/EBIT | 11.4 | 6.3 | 8.1 | 10.7 | 7.6 | 8.7 | N/A | 11.1 | 14.9 | 64.4 | 59.9 | 57.9 | 25.2 |
| Price/Book | 3.8 | 3.8 | 3.7 | 3.7 | 2.5 | 2.8 | 2.7 | 2.3 | 1.8 | 1.7 | 2.1 | 2.9 | 3.3 |
| Price/Sales | 0.9 | 1.2 | 1.1 | 1.5 | 1.3 | 1.2 | 2.3 | 1.9 | 1.0 | 0.7 | 0.7 | 0.6 | 0.8 |
| FCF Yield | 4.5% | 4.6% | 7.9% | 5.0% | 12.1% | 10.9% | -6.8% | 7.6% | -0.7% | -2.0% | -7.5% | -3.6% | -1.8% |
| Market Cap | 25.6B | 26.0B | 28.5B | 35.9B | 24.6B | 27.1B | 24.2B | 23.9B | 19.3B | 17.9B | 21.3B | 23.1B | 22.7B |
| Avg. Price | 25.17 | 36.28 | 37.08 | 50.98 | 51.02 | 48.79 | 37.22 | 48.97 | 37.37 | 29.26 | 28.56 | 31.91 | 45.08 |
| Year-End Price | 37.01 | 38.96 | 45.01 | 59.58 | 42.75 | 50.35 | 42.91 | 39.35 | 29.95 | 28.10 | 33.31 | 41.28 | 45.08 |
SOUTHWEST AIRLINES CO passes 4 of 9 quality checks, suggesting mixed fundamentals.
SOUTHWEST AIRLINES CO trades at 57.1x trailing earnings, compared to its 15-year median P/E of 24.4x, suggesting it is currently Expensive relative to its historical range. The company's 5-year average ROIC is 7.0% with a gross margin of 72.6%. Total shareholder yield (dividends + buybacks) is 15.1%. At current prices, the estimated annualized return to fair value is -23.6%.
SOUTHWEST AIRLINES CO (LUV) has a net profit margin of 1.6%. This is a modest margin.
SOUTHWEST AIRLINES CO (LUV) generated $-831 million in free cash flow in its most recent fiscal year. Negative free cash flow may indicate heavy investment or operational challenges.
SOUTHWEST AIRLINES CO (LUV) has a debt-to-equity ratio of 0.75. This indicates moderate leverage.
SOUTHWEST AIRLINES CO (LUV) reported earnings per share (EPS) of $0.79 in its most recent fiscal year.
SOUTHWEST AIRLINES CO (LUV) has a return on equity (ROE) of 4.8%. This indicates moderate shareholder returns.
SOUTHWEST AIRLINES CO (LUV) has a 5-year average gross margin of 72.6%. This high margin suggests strong pricing power and a potential competitive moat.
The Ledger Terminal provides 19 years of financial data for SOUTHWEST AIRLINES CO (LUV), sourced directly from SEC EDGAR filings. This includes income statements, balance sheets, cash flow statements, and key financial ratios.
SOUTHWEST AIRLINES CO (LUV) has a book value per share of $14.26, based on its most recent annual SEC filing.
Based on recent SEC filings and earnings disclosures, Management expects 2026 to deliver dramatically higher earnings than 2025, with full-year adjusted EPS guidance of at least $4 compared to 2025 adjusted EPS of $0.93, driven by continued maturation and acceleration of revenue initiatives including assigned seating, extra legroom, and bag fees, combined with disciplined cost management and network optimization. The company expects to deliver more than $1 billion of incremental EBIT from assigned and extra legroom seating in 2026 and anticipate hitting full run rate of approximately $1.5 billion in 2027, with additional upside potential as booking curves fully develop through low and high seasons. First quarter 2026 RASM is expected to increase at least 9.5% year-over-year, with contributions from yield, load factor, initiatives, and loyalty programs, while capacity is expected to grow between 1% and 2% in Q1 despite operating with approximately 7 fewer aircraft due to continued efficiency gains. The company plans to keep management headcount expense flat to 2025 levels in 2026 while focusing on operational efficiency within frontline teams, and expects continued strong cost discipline with full-year net capital spending in the range of $3 billion to $3.5 billion, positioning Southwest to deliver significant margin expansion and earnings growth while maintaining its investment-grade balance sheet.