Latest Ratios: P/E Ratio 51.9x · EV/EBITDA 11.7x · ROE 4.8%. (1996–2025 historical series)
Price-based multiples — how expensive the stock is relative to earnings, sales, book value, and cash flow
| Metric | TTM | FY 2025 | FY 2024 | FY 2023 | FY 2022 | FY 2021 | FY 2020 | FY 2019 | FY 2018 | FY 2017 | FY 2016 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Market Cap | $20.1B | $23.1B | $21.6B | $18.5B | $21.6B | $26.1B | $26.3B | $29.1B | $26.7B | $39.5B | $31.5B |
| Enterprise Value | $23.2B | $26.2B | $22.2B | $18.4B | $21.6B | $25.9B | $27.5B | $30.5B | $28.2B | $41.6B | $33.3B |
| P/E Ratio → | 51.95 | 52.32 | 44.83 | 38.00 | 38.70 | 26.61 | — | 12.64 | 10.83 | 11.32 | 14.04 |
| P/S Ratio | 0.72 | 0.82 | 0.79 | 0.71 | 0.91 | 1.65 | 2.91 | 1.30 | 1.21 | 1.86 | 1.54 |
| P/B Ratio | 2.87 | 2.89 | 2.09 | 1.76 | 2.02 | 2.51 | 2.97 | 2.96 | 2.71 | 3.78 | 3.74 |
| P/FCF | — | — | — | — | — | 14.41 | — | 9.83 | 9.15 | 23.49 | 14.70 |
| P/OCF | 10.90 | 12.52 | 46.79 | 5.84 | 5.70 | 11.24 | — | 7.30 | 5.45 | 10.04 | 7.35 |
P/E links to full P/E history page with 30-year chart
Enterprise-value multiples — capital-structure-neutral measures of total business value
| Metric | TTM | FY 2025 | FY 2024 | FY 2023 | FY 2022 | FY 2021 | FY 2020 | FY 2019 | FY 2018 | FY 2017 | FY 2016 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| EV / Revenue | — | 0.93 | 0.81 | 0.71 | 0.91 | 1.64 | 3.04 | 1.36 | 1.28 | 1.97 | 1.63 |
| EV / EBITDA | 11.68 | 13.19 | 11.21 | 10.54 | 9.12 | 8.65 | — | 7.31 | 6.40 | 9.00 | 7.01 |
| EV / EBIT | 54.27 | 38.78 | 27.30 | 21.17 | 20.99 | 14.74 | — | 10.05 | 8.66 | 12.50 | 9.43 |
| EV / FCF | — | — | — | — | — | 14.30 | — | 10.32 | 9.67 | 24.79 | 15.50 |
Margins and return-on-capital ratios measuring operating efficiency
Full margin charts and quarterly trend are on the Earnings History page
| Metric | TTM | FY 2025 | FY 2024 | FY 2023 | FY 2022 | FY 2021 | FY 2020 | FY 2019 | FY 2018 | FY 2017 | FY 2016 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Gross Margin | 17.4% | 17.4% | 16.2% | 16.2% | 20.0% | 26.1% | -20.9% | 26.7% | 27.6% | 29.5% | 30.5% |
| Operating Margin | 1.5% | 1.5% | 1.2% | 0.9% | 4.3% | 10.9% | -42.2% | 13.2% | 14.6% | 16.1% | 17.2% |
| Net Profit Margin | 1.6% | 1.6% | 1.7% | 1.8% | 2.3% | 6.2% | -34.0% | 10.3% | 11.2% | 16.5% | 11.0% |
| Metric | TTM | FY 2025 | FY 2024 | FY 2023 | FY 2022 | FY 2021 | FY 2020 | FY 2019 | FY 2018 | FY 2017 | FY 2016 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| ROE | 4.8% | 4.8% | 4.5% | 4.4% | 5.1% | 10.1% | -32.9% | 23.4% | 24.3% | 37.0% | 28.4% |
| ROA | 1.4% | 1.4% | 1.3% | 1.3% | 1.5% | 2.8% | -10.2% | 8.8% | 9.6% | 14.4% | 10.1% |
| ROIC | 2.9% | 2.9% | 2.3% | 1.6% | 7.3% | 12.8% | -26.9% | 19.6% | 20.1% | 22.5% | 27.7% |
| ROCE | 2.2% | 2.2% | 1.4% | 0.9% | 3.9% | 6.3% | -17.3% | 16.8% | 17.5% | 19.7% | 23.2% |
Solvency and debt-coverage ratios — lower is generally safer
| Metric | TTM | FY 2025 | FY 2024 | FY 2023 | FY 2022 | FY 2021 | FY 2020 | FY 2019 | FY 2018 | FY 2017 | FY 2016 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Debt / Equity | 0.75 | 0.75 | 0.78 | 0.87 | 0.89 | 1.18 | 1.37 | 0.41 | 0.34 | 0.35 | 0.40 |
| Debt / EBITDA | 3.01 | 3.01 | 4.07 | 5.27 | 4.00 | 4.10 | — | 0.96 | 0.77 | 0.79 | 0.71 |
| Net Debt / Equity | — | 0.39 | 0.05 | -0.01 | -0.00 | -0.02 | 0.13 | 0.15 | 0.15 | 0.21 | 0.20 |
| Net Debt / EBITDA | 1.58 | 1.58 | 0.28 | -0.05 | -0.01 | -0.07 | — | 0.35 | 0.35 | 0.47 | 0.36 |
| Debt / FCF | — | — | — | — | — | -0.11 | — | 0.49 | 0.52 | 1.29 | 0.80 |
| Interest Coverage | 5.98 | 5.98 | 3.79 | 3.68 | 3.42 | 4.07 | -12.55 | 37.06 | 35.02 | 51.23 | 47.00 |
Short-term solvency ratios and asset-utilisation metrics
| Metric | TTM | FY 2025 | FY 2024 | FY 2023 | FY 2022 | FY 2021 | FY 2020 | FY 2019 | FY 2018 | FY 2017 | FY 2016 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Current Ratio | 0.52 | 0.52 | 0.92 | 1.14 | 1.43 | 1.97 | 2.02 | 0.67 | 0.64 | 0.70 | 0.66 |
| Quick Ratio | 0.45 | 0.45 | 0.85 | 1.07 | 1.35 | 1.91 | 1.97 | 0.61 | 0.58 | 0.64 | 0.61 |
| Cash Ratio | 0.30 | 0.30 | 0.71 | 0.94 | 1.18 | 1.69 | 1.78 | 0.45 | 0.47 | 0.47 | 0.48 |
| Asset Turnover | — | 0.97 | 0.81 | 0.72 | 0.67 | 0.43 | 0.26 | 0.87 | 0.84 | 0.84 | 0.88 |
| Inventory Turnover | 29.89 | 29.89 | 28.78 | 27.10 | 24.13 | 21.74 | 26.42 | 31.09 | 34.51 | 35.46 | 41.73 |
| Days Sales Outstanding | — | 14.94 | 14.74 | 16.14 | 15.94 | 31.37 | 45.58 | 17.67 | 9.44 | 11.41 | 9.76 |
Earnings, FCF, buyback, and dividend yields — total returns to shareholders
Full dividend history and growth charts are on the Dividend History page
| Metric | TTM | FY 2025 | FY 2024 | FY 2023 | FY 2022 | FY 2021 | FY 2020 | FY 2019 | FY 2018 | FY 2017 | FY 2016 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Dividend Yield | 1.7% | 1.7% | 2.0% | 2.3% | — | — | 0.7% | 1.3% | 1.2% | 0.7% | 0.7% |
| Payout Ratio | 90.5% | 90.5% | 92.5% | 92.0% | — | — | — | 16.2% | 13.5% | 7.9% | 9.9% |
| Metric | TTM | FY 2025 | FY 2024 | FY 2023 | FY 2022 | FY 2021 | FY 2020 | FY 2019 | FY 2018 | FY 2017 | FY 2016 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings Yield | 1.9% | 1.9% | 2.2% | 2.6% | 2.6% | 3.8% | — | 7.9% | 9.2% | 8.8% | 7.1% |
| FCF Yield | — | — | — | — | — | 6.9% | — | 10.2% | 10.9% | 4.3% | 6.8% |
| Buyback Yield | 12.7% | 11.1% | 1.2% | 0.0% | 0.0% | 0.0% | 1.7% | 6.9% | 7.5% | 4.1% | 5.5% |
| Total Shareholder Yield | 14.4% | 12.8% | 3.1% | 2.3% | 0.0% | 0.0% | 2.4% | 8.2% | 8.7% | 4.7% | 6.3% |
| Shares Outstanding | — | $558M | $643M | $640M | $642M | $609M | $565M | $539M | $574M | $603M | $633M |
Includes 30+ ratios · 30 years · Updated daily
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Quick answers to the most common questions about buying LUV stock.
Southwest Airlines Co.'s current P/E ratio is 51.9x. The historical average is 28.6x. This places it at the 90th percentile of its historical range.
Southwest Airlines Co.'s current EV/EBITDA is 11.7x. This enterprise value multiple compares the company's total value (equity + debt - cash) to its EBITDA. The historical average is 9.8x.
Southwest Airlines Co.'s return on equity (ROE) is 4.8%. The historical average is 11.2%.
Based on historical data, Southwest Airlines Co. is trading at a P/E of 51.9x. This is at the 90th percentile of its historical P/E range. Compare with industry peers and growth rates for a complete picture.
Southwest Airlines Co.'s current dividend yield is 1.74% with a payout ratio of 90.5%.
Southwest Airlines Co. has 17.4% gross margin and 1.5% operating margin.
Southwest Airlines Co.'s Debt/EBITDA ratio is 3.0x, indicating high leverage. A ratio between 2-4x is manageable but warrants monitoring.
Key Metrics
Top Statement Risk
Boeing delivery delays
Metrics are mathematically derived from official filings.
Margins Squeezed by Rising Costs
Operating margin contracted to 3.4% in Q2 2026 from 5.4% a year earlier, per the latest quarterly filing, as fuel and labor costs outpaced revenue growth, underscoring persistent margin pressure.
The 177.3% gross margin in Q2 2026 is a data anomaly, likely reflecting a one-time adjustment, and obscures the underlying trend. Excluding that, gross margins have hovered in the mid-teens to low-20s, but operating margin remains thin, indicating that cost inflation is eroding the company's historical cost advantage. The 1.53% operating margin for the trailing twelve months suggests that the business is barely covering its fixed costs, leaving little room for error if demand softens or fuel prices spike.
Returns Decay Amid Fleet Renewal
ROIC fell to 2.1% in Q2 2026 from 2.7% a year earlier, based on reported figures, as capital employed grew with fleet investments while operating income stagnated, indicating deteriorating capital efficiency.
ROE and ROA have also declined, with ROE at 3.3% versus 3.6% in the prior year quarter, reflecting a shrinking equity base due to buybacks and losses. The return on capital is well below the cost of capital, suggesting that the company is not generating sufficient returns to justify its capital expenditures. This trend may persist if Boeing delivery delays force the company to operate older, less fuel-efficient aircraft, increasing maintenance costs and reducing the payoff from new investments.
Working Capital Turns Negative
Cash conversion cycle turned negative to 8 days in Q2 2026, per the latest balance sheet data, as DIO and DPO swung negative, indicating the company is collecting cash before paying suppliers, a sign of operational leverage.
The negative DIO and DPO are unusual and may reflect advance payments for fuel or maintenance contracts, but they also suggest that the company is managing its working capital aggressively. Asset turnover improved to 0.28 from 0.21 a year ago, indicating better revenue generation per dollar of assets, but this is offset by thin margins. The efficiency gains are not translating into profitability, highlighting that the core issue is cost control rather than asset utilization.
Leverage Creeps Higher on Equity Erosion
Debt-to-equity rose to 0.97 in Q2 2026 from 0.75 in Q4 2025, per the balance sheet, as equity shrank to $7.1 billion, while interest coverage fell to 3.79, signaling tighter debt service capacity.
Although total debt declined modestly, the equity base has been eroded by buybacks and losses, inflating the leverage ratio. Interest coverage of 3.79 is still adequate but has deteriorated from 14.13 in Q4 2025, reflecting both lower operating income and higher interest expense. The reported D/E understates true leverage because aircraft leases are not fully capitalized, and investors should monitor off-balance-sheet obligations that could push effective leverage higher.
Liquidity Buffer Thins Rapidly
Current ratio fell to 0.49 in Q2 2026 from 0.92 in Q4 2024, per the balance sheet, as cash dropped to $3.8 billion, suggesting a shrinking cushion against operational shocks.
The quick ratio of 0.42 indicates that the company relies heavily on inventory and other current assets to cover short-term liabilities, which is typical for airlines but still leaves little room for error. The $3.2 billion cash position provides some buffer, but with negative free cash flow in most quarters, the company may need to tap credit lines or delay capex if a downturn hits. The declining deferred revenue balance also suggests softer forward bookings, which could pressure liquidity further.
Misapplied Metric: P/E Ratio
The trailing P/E of 56.92 is misleading for LUV, as it reflects depressed earnings, while the forward P/E of 13.48 better captures normalized earnings, per current valuation data, but even that may overstate quality.
The P/E ratio is commonly used to compare airlines, but for LUV, the trailing earnings are artificially low due to one-time items and cyclical troughs, making the multiple appear expensive. The forward P/E is more relevant, but it assumes a recovery that may not materialize if cost pressures persist. A better metric is EV/EBITDA, which at 12.65 is still above peers like DAL (8.99) and UAL (8.43), suggesting the market is pricing in a quality premium that may no longer be justified. Investors should focus on cash flow metrics like EV/EBITDAR to account for lease obligations and get a truer picture of valuation.