Upside case
Bull case
$164+240.9%
LUV would need investors to value it at roughly 61x earnings — about 43x more generous than today's 18x forward P/E. That requires meaningful multiple expansion on top of continued earnings growth.
Analysis OverviewHoldUpdated Jun 18, 2026
Southwest Airlines Co. (LUV) Stock Analysis
Wall Street verdict, consensus price target, and analyst rating breakdown — everything needed to frame the risk/reward at today's price.
Analyst consensus
Hold
Covering
45
analysts
19 bullish · 5 bearish · 45 covering LUV
Strong Buy
0
Buy
19
Hold
21
Sell
5
Strong Sell
0
Consensus Target
$49
+1.6% vs today
Scenario Range
$78 – $164
Model bear to bull value window
Coverage
45
Published analyst ratings
Valuation Context
18.0x
Forward P/E · Market cap $23.6B
LUV price targets
Three scenarios for where LUV stock could go
Current
~$48
Confidence
45 / 100
Updated
Jun 18, 2026
Where we are now
Current · $48
Bear
$78
Base
$124
Bull
$164
Market caseClosest to today
Base case
$124+158.7%
At 46x on FY1 earnings, the base case reflects a reasonable but not stretched valuation. It prices in continued growth without assuming an exceptional setup.
Stress case
Bear case
$78+63.0%
The bear case assumes sentiment or fundamentals disappoint enough to push LUV down roughly 63% from the current price.
Not financial advice. Model confidence reflects internal scenario assumptions, not a guarantee of returns. Past performance does not predict future results.
Southwest Airlines Co.
LUV · NYSEIndustrialsAirlines, Airports & Air ServicesDecember year-end
Southwest Airlines is a major U.S. low-cost passenger airline that operates a point-to-point route network primarily within the United States and to near-international destinations. It generates revenue primarily from passenger fares — with ancillary income from services like EarlyBird Check-In, upgraded boarding, and its Rapid Rewards loyalty program — while maintaining a simplified fleet of only Boeing 737 aircraft to reduce costs. The company's key competitive advantage is its low-cost operational model enabled by high aircraft utilization, efficient point-to-point routing, and a strong corporate culture that drives employee productivity.
Market Cap
$23.6B
Revenue TTM
$28.9B
Net Income TTM
$817M
Net Margin
2.8%
LUV Revenue and Earnings Performance
Quarterly beat-or-miss track record against analyst estimates, plus forward revenue and EPS outlook for the next two fiscal years.
EPS Beat Rate
58%Exceptional
12 quarters tracked
Revenue Beat Rate
50%Exceptional
vs consensus estimates
Avg EPS Surprise
+360.6%
above Street consensus
Beat / Miss Record
BeatMissLeft = EPS · Right = Revenue
Q3 2025
Q4 2025
Q1 2026
Q2 2026
Last 4 Quarters
EPS beats: 3 of 4Q3 2025
EPS
$0.43/$0.51
Revenue
$7.2B/$7.3B
Q4 2025
EPS
$0.11/$-0.04
Revenue
$6.9B/$6.9B
Q1 2026
EPS
$0.58/$0.57
Revenue
$7.4B/$7.5B
Q2 2026
EPS
$0.45/$0.45
Revenue
$7.2B/$7.3B
| Quarter | EPS (Actual / Est) | EPS Surprise | Revenue (Actual / Est) | Rev Surprise |
|---|---|---|---|---|
| Q3 2025 | $0.43/$0.51 | -15.9% | $7.2B/$7.3B | -0.7% |
| Q4 2025 | $0.11/$-0.04 | +398.7% | $6.9B/$6.9B | +0.5% |
| Q1 2026 | $0.58/$0.57 | +2.1% | $7.4B/$7.5B | -0.8% |
| Q2 2026 | $0.45/$0.45 | +0.0% | $7.2B/$7.3B | -0.3% |
FY1–FY2 Estimates
Revenue Outlook
FY1
$32.0B
+10.7% YoY
FY2
$34.4B
+7.5% YoY
EPS Outlook
FY1
$2.02
+24.2% YoY
FY2
$2.76
+36.7% YoY
Trailing FCF (TTM)-$401M
FCF Margin: -1.4%
Next Earnings
July 22, 2026
Expected EPS
$0.49
Expected Revenue
$8.6B
LUV beat EPS estimates in 3 of 4 tracked quarters. A strong delivery record supports forward estimate credibility.
LUV Revenue Breakdown by Segment
Product and geographic revenue mix from the latest annual disclosure, with year-over-year growth by segment.
Latest disclosure
FY 2025
Total disclosed revenue $28.1B
Product Mix
Latest annual revenue by segment or product family
Passenger
91.0%
+2.2% YoY
Tap, hover, or focus a slice to inspect segment detail.
Geographic Mix
Latest annual revenue by reported region
North America
97.3%
+2.2% YoY
Tap, hover, or focus a slice to inspect segment detail.
Passenger is the largest disclosed segment at 91.0% of FY 2025 revenue, up 2.2% YoY.
North America is the largest reported region at 97.3%, up 2.2% YoY.
LUV Valuation Snapshot
Current multiples compared to the S&P 500, the company's sector, and its own five-year average.
Relative Value Signal
Expensive versus peers
Fair value est. $32 — implies -33.9% from today's price.
Premium to Fair Value
33.9%
above fair value
Deep DiscountFair ValueVery Expensive
vs S&P 500 Trailing P/E
LUV
60.7x
vs
S&P 500
24.4x
+148% premium
vs Industrials Trailing P/E
LUV
60.7x
vs
Industrials
25.6x
+137% premium
vs LUV 5Y Avg P/E
Today
60.7x
vs
5Y Average
40.1x
+51% premium
Forward PE
18.0x
S&P 500
18.8x
-4%
Industrials
21.2x
-15%
5Y Avg
—
—
Trailing PE
60.7x
S&P 500
24.4x
+148%
Industrials
25.6x
+137%
5Y Avg
40.1x
+51%
PEG Ratio
—
S&P 500
1.66x
—
Industrials
1.65x
—
5Y Avg
—
—
EV/EBITDA
13.2x
S&P 500
15.2x
-13%
Industrials
13.9x
-5%
5Y Avg
10.5x
+26%
Price/FCF
—
S&P 500
20.7x
—
Industrials
20.0x
—
5Y Avg
14.4x
—
Price/Sales
0.8x
S&P 500
3.1x
-73%
Industrials
1.6x
-46%
5Y Avg
1.0x
-14%
Dividend Yield
1.49%
S&P 500
1.91%
-22%
Industrials
1.21%
+23%
5Y Avg
2.01%
-26%
| Metric | LUV | S&P 500 | Industrials | 5Y Avg LUV |
|---|---|---|---|---|
| Forward PE | 18.0x | 18.8x | 21.2x-15% | — |
| Trailing PE | 60.7x | 24.4x+148% | 25.6x+137% | 40.1x+51% |
| PEG Ratio | — | 1.66x | 1.65x | — |
| EV/EBITDA | 13.2x | 15.2x-13% | 13.9x | 10.5x+26% |
| Price/FCF | — | 20.7x | 20.0x | 14.4x |
| Price/Sales | 0.8x | 3.1x-73% | 1.6x-46% | 1.0x-14% |
| Dividend Yield | 1.49% | 1.91% | 1.21% | 2.01% |
LUV trades above S&P 500 benchmarks on 1 of 4 measured multiples — appears modestly priced relative to the S&P 500 on most measures.
Forward P/E and PEG reflect analyst consensus estimates. Historical averages use trailing ratios where forward data is unavailable.S&P 500 and sector benchmarks both use trailing median P/E — similar readings indicate the broader index and sector are priced alike.
Open valuation toolLUV Financial Health
Verdict
Adequate
LUV returns 12.3% of market cap to shareholders annually.
Cash Engine
Revenue, margins, and cash generation
Revenue (TTM)
Trailing-twelve-month sales base
$28.9B
Revenue Growth
TTM vs prior year
+4.7%
Gross Margin
Gross profit as a share of revenue
16.5%
Operating Margin
Operating income divided by revenue
3.4%
Net Margin
Net income divided by revenue
2.8%
EPS (TTM)
Diluted earnings per share, trailing twelve months
$1.62
Free Cash Flow (TTM)
Cash generation after capex
-$401M
FCF Margin
FCF as share of revenue — the primary cash quality signal
-1.4%
Capital Quality
ROIC, leverage, and debt serviceability
ROIC
Return on invested capital — primary competitive quality signal
3.0%
ROA
Return on assets, trailing twelve months
2.8%
Cash & Equivalents
Liquid assets on the balance sheet
$3.2B
Net Debt
Total debt minus cash
$2.8B
Debt Serviceability
Net debt as a multiple of annual free cash flow
—
ROE *
Return on equity, trailing twelve months
10.7%
* Elevated by buyback-compressed equity — compare ROIC (3.0%) for an undistorted picture of capital efficiency.
Shareholder Returns
How capital is returned to owners
Total shareholder yield
12.3%
Dividend
1.5%
Buyback
10.8%
Share Repurchases
Trailing buyback outflow — dollar magnitude of capital returned
$2.5B
Dividend / Share
Annualized trailing dividend per share
$0.72
Payout Ratio
Share of earnings distributed as dividends
90.5%
Shares Outstanding
Declining as buybacks retire shares
491M
All figures from the trailing twelve months. ROIC uses invested capital (equity + net debt). ROE marked * where buyback-compressed equity base may inflate the figure.
Open full ratios pageLUV Stock Risk Factors
Key factors that could pressure the stock price, compress the multiple, or weigh on future results.
AI analysis · updated June 18, 2026
High Risk
Margin pressure
Continued margin pressure from higher unit costs, capacity missteps, or weaker-than-expected business travel could push the stock toward the low end of analyst targets.
Medium
Profitability recovery uncertainty
Margin recovery is expected to reach 10-15% annually, but historical profitability pre-COVID may not guarantee future performance amid evolving industry challenges.
Medium
Earnings growth risk
Earnings projections of $4-6.50 per share by 2026 may be at risk if cost control measures or new revenue streams (e.g., assigned seats, premium services) underperform.
Lower
Valuation concerns
High trailing and forward P/E ratios (32.11 and 22.88 respectively) suggest the stock may be overvalued relative to earnings potential.
Medium
Competitive pressures
Adoption of Starlink and other innovations may not sustain customer preference if competitors match or surpass Southwest's offerings.
These are risk mechanisms, not predictions. The key question is which would force a cut to earnings estimates or a lower multiple than the market currently prices in.
Why LUV Stock Could Outperform
Structural drivers behind the upside case and why the stock could outperform over the next 12 months.
AI analysis · updated June 18, 2026
Return to profitability
Southwest Airlines reported net income of US$227 million in Q1 2026, signaling a return to profitability and strong financial performance.
Record operating revenue
The company achieved record operating revenue of US$7,249 million in Q1 2026, indicating robust demand and customer uptake of new offerings.
Strong customer demand
Southwest's flight deals and low fares are driving strong customer demand, as evidenced by their revenue growth and market presence.
Share buybacks
The company's financial results included updates on buybacks, which can enhance shareholder value and signal confidence in future performance.
Margin recovery potential
The bull case assumes successful margin recovery, which could improve profitability and drive share price appreciation.
Stable fuel costs
Favorable fuel cost stability is a key component of the bull thesis, reducing operational volatility and supporting earnings growth.
Business travel rebound
Stronger business-travel volumes are expected to push shares higher, as Southwest benefits from increased demand in this segment.
Operational execution
Effective operational execution is cited as a driver for the bull case, ensuring efficiency and customer satisfaction.
Favorable yields
The company is expected to benefit from favorable yields, contributing to revenue growth and profitability.
A real bull case compounds — each driver matters most when it strengthens margins, supports capital returns, and keeps the company above the market's minimum growth bar simultaneously.
LUV Stock Price Performance
52-week range context and price returns across multiple time horizons. Dividend contribution is shown separately in the Capital Return section.
Current Price
$47.97
52W Range Position
73%
52-Week Range
Current price plotted between the 52-week low and high.
52-Week Low
$28.98
+65.5% from the low
52-Week High
$54.89
-12.6% from the high
1 Month
+25.05%
3 Month
+19.36%
YTD
+16.2%
1 Year
+53.9%
3Y CAGR
+11.6%
5Y CAGR
-2.8%
10Y CAGR
+1.8%
Range context matters because valuation compression and earnings misses rarely hit from the same starting point. A stock already far below its high can still fall, but it is no longer carrying the same embedded optimism as one pressing a fresh peak.
LUV vs Peers
Valuation, growth, and margin comparison against the closest publicly traded peers for this company.
Peer Set
Accurate peer set
Forward PE
18.0x
vs 15.4x median
+17% above peer median
Revenue Growth
+10.7%
vs +10.0% median
+7% above peer median
Net Margin
2.8%
vs 0.4% median
+684% above peer median
| Company | Mkt Cap | Fwd PE | Rev Grw | Margin | Rating | Upside |
|---|---|---|---|---|---|---|
LUV LUV Southwest Airlines Co. | $23.6B | 18.0x | +10.7% | 2.8% | Hold | +1.6% |
DAL DAL Delta Air Lines, Inc. | $55.0B | 15.4x | +7.1% | 7.9% | Buy | +3.2% |
UAL UAL United Airlines Holdings, Inc. | $38.4B | 12.6x | +10.0% | 6.1% | Buy | +18.0% |
AAL AAL American Airlines Group Inc. | $10.6B | — | +8.5% | 0.4% | Buy | +7.9% |
ULC ULCC Frontier Group Holdings, Inc. | $1.7B | — | +10.6% | -9.6% | Hold | -16.9% |
ALG ALGT Allegiant Travel Company | $1.9B | 24.6x | +10.4% | -1.7% | Hold | +10.8% |
This peer comparison reflects companies with similar business models, product lines, or market positioning, supplemented by industry grouping when direct matches are limited.
LUV Dividend and Capital Return
LUV returns capital mainly through $2.5B/year in buybacks (10.8% buyback yield), with a modest 1.49% dividend — combining for 12.3% total shareholder yield.
Dividend At RiskFCF Unknown
Total Shareholder Yield
12.3%
Dividend + buyback return per year
Buyback Yield
10.8%
Dividend Yield
1.49%
Payout Ratio
90.5%
How LUV Splits Its Return
Div 1.49%
Buyback 10.8%
Dividend 1.49%Buybacks 10.8%
Dividend Profile
Yield, cadence, and growth quality
Dividend / Share
Trailing annualized cash dividend
$0.72
Growth Streak
Consecutive years of dividend increases
0Y
3Y Div CAGR
0.0%
5Y Div CAGR
32.0%
Ex-Dividend Date
—
Payment Cadence
Quarterly
4 payments over the last 12 months
Buyback Engine
How much per-share support comes from repurchases
Repurchases (TTM)
Cash used for buybacks in the latest trailing period
$2.5B
Estimated Shares Retired
53M
Approx. Share Reduction
10.8%
Shares Outstanding
Current diluted share count from the screening snapshot
491M
At 10.8%/year, buybacks mechanically lift EPS even with flat earnings — each remaining share represents a slightly larger piece of the company.
| Year | Div / Share | YoY Grw | BB Yield | Total Yield |
|---|---|---|---|---|
| 2026 | $0.36 | — | — | — |
| 2025 | $0.72 | 0.0% | 11.1% | 12.8% |
| 2024 | $0.72 | -20.0% | 1.2% | 3.1% |
| 2023 | $0.90 | — | 0.0% | 2.3% |
| 2020 | $0.18 | -74.3% | 1.7% | 2.4% |
FAQ
7 questionsLUV Investor Questions
Common questions answered from live analyst data and company financials.
01Is Southwest Airlines Co. (LUV) stock a buy or sell in 2026?
Southwest Airlines Co. (LUV) is rated Hold by Wall Street analysts as of 2026. Of 45 analysts covering the stock, 19 rate it Buy or Strong Buy, 21 rate it Hold, and 5 rate it Sell or Strong Sell. The consensus 12-month price target is $49, implying +1.6% from the current price of $48. The bear case scenario is $78 and the bull case is $164.
02What is the LUV stock price target for 2026?
The Wall Street consensus price target for LUV is $49 based on 45 analyst estimates. The high-end target is $60 (+25.1% from today), and the low-end target is $32 (-33.3%). The base case model target is $124.
03Is Southwest Airlines Co. (LUV) stock overvalued in 2026?
LUV trades at 18.0x times forward earnings. The stock trades at a notable premium to the broad market, which is typical for businesses with strong free cash flow and above-average growth expectations. Based on current multiples versus the peer group, the relative model signals expensive versus peers. Whether the stock is over or undervalued ultimately depends on whether consensus earnings estimates are achievable.
04What are the main risks for Southwest Airlines Co. (LUV) stock in 2026?
The primary risks for LUV in 2026 are: (1) Margin pressure — Continued margin pressure from higher unit costs, capacity missteps, or weaker-than-expected business travel could push the stock toward the low end of analyst targets. (2) Profitability recovery uncertainty — Margin recovery is expected to reach 10-15% annually, but historical profitability pre-COVID may not guarantee future performance amid evolving industry challenges. (3) Earnings growth risk — Earnings projections of $4-6. Each factor has the potential to pressure earnings or compress the stock's valuation multiple.
05What is Southwest Airlines Co.'s revenue and earnings forecast?
Analyst consensus estimates LUV will report consensus revenue of $32.0B (+10.7% year-over-year) and EPS of $2.02 (+24.2% year-over-year) for the upcoming fiscal year. The following year, analysts project $34.4B in revenue.
06When does Southwest Airlines Co. (LUV) report its next earnings?
Southwest Airlines Co. is expected to report its next earnings on approximately 2026-07-22. Consensus expects EPS of $0.49 and revenue of $8.6B. Over recent quarters, LUV has beaten EPS estimates 58% of the time.
07How much free cash flow does Southwest Airlines Co. generate?
Southwest Airlines Co. (LUV) had a free cash outflow of $401M in free cash flow over the trailing twelve months — a free cash flow margin of 1.4%. LUV returns capital to shareholders through dividends (1.5% yield) and share repurchases ($2.5B TTM).