MODEL VERDICT
Southwest Airlines Co. (LUV)
Relative Valuation•Peer multiples, Monte Carlo simulation & quality-adjusted fair value
Popular:
Composite score derived from valuation, quality, and risk factors
Quantitative model thresholds · For educational and research purposes only
Each row records the model's monthly assessment. High Conviction = the model detected notable undervaluation vs peers. Neutral = no notable divergence was found. The return column shows the actual price change over 90 days for reference. This is a quantitative observation log — not investment advice.
| Date | Assessment | Score | Price | Status | 90d Fwd Return |
|---|---|---|---|---|---|
| May 1, 2026 | NEUTRAL | 0.18 | $38.76 | CURRENT | — |
| Apr 24, 2026 | NEUTRAL | 0.18 | $39.45 | CURRENT | — |
| Apr 17, 2026 | NEUTRAL | 0.17 | $42.70 | CURRENT | — |
| Apr 16, 2026 | NEUTRAL | 0.17 | $41.70 | CURRENT | — |
| Apr 10, 2026 | NEUTRAL | 0.17 | $39.56 | CURRENT | — |
Historical model observations for research purposes only. Past quantitative patterns do not predict future results. Not a recommendation to buy, sell, or hold any security.
| Methodology | Fair Value | vs Current | Weight | Quality | Status |
|---|---|---|---|---|---|
| Forward P/E 6 analyst estimates | $39.83 | +2.8% | 20% | A- | Analyst Est. |
| EV/EBITDA 8 industry peers | $38.01 | -1.9% | 20% | A- | Peer Data |
| Industry Median P/E 6 industry peers | $9.93 | -74.4% | 15% | A | Peer Data |
| EV/EBIT 7 industry peers | $6.71 | -82.7% | 8% | B+ | Peer Data |
| EV To Revenue 9 industry peers | $74.21 | +91.5% | 4% | B | Data |
| Price / Sales 9 industry peers | $45.11 | +16.4% | 3% | B | Model Driven |
| Earnings Yield 6 industry peers | $8.55 | -77.9% | 2% | B | Data |
| Weighted Output Blended model output | $33.04 | -14.8% | 100% | 65 | SLIGHTLY OVERVALUED |
| EPS Growth ↓ | P/E Multiple → | 41× | 45× | 49× (Current) | 53× | 57× |
|---|---|---|---|---|---|
| Bear Case (4%) | $34 | $37 | $40 | $44 | $47 |
| Conservative (7%) | $34 | $38 | $41 | $45 | $48 |
| Base Case (10.0%) | $36 | $39 | $43 | $46 | $50 |
| Bull Case (14%) | $37 | $40 | $44 | $48 | $51 |
Cross-sectional regression predicting expected multiples based on growth, margins, ROIC, and beta.
| Multiple | Avg | Median | Min | Max | Std |
|---|---|---|---|---|---|
| P/E Ratio | 35.52 | 38.35 | 12.64 | 52.32 | 14.06 |
| EV/EBIT | 22.07 | 21.08 | 10.05 | 38.18 | 9.87 |
| EV/EBITDA | 9.97 | 9.83 | 7.31 | 12.98 | 2.02 |
| P/FFO | 10.39 | 10.81 | 8.27 | 11.60 | 1.38 |
| P/TBV | 2.83 | 2.85 | 2.00 | 3.46 | 0.61 |
| P/AFFO | 95.71 | 15.01 | 11.68 | 260.45 | 142.68 |
| P/B Ratio | 2.46 | 2.51 | 1.76 | 2.97 | 0.50 |
| Div Yield | 0.02 | 0.02 | 0.01 | 0.02 | 0.01 |
| P/S Ratio | 1.30 | 0.91 | 0.71 | 2.91 | 0.79 |
Based on our peer multiples analysis with 19 valuation metrics, the model estimates LUV's fair value at $33.04 vs the current price of $38.76, implying -14.8% downside potential. Model verdict: Slightly Overvalued. Confidence: 65/100. This is a quantitative estimate, not a recommendation.
The blended fair value of $33.04 is calculated using four lenses: industry median multiples (40%), historical multiples (30%), forward estimates (20%), and quality-adjusted multiples (10%). Monte Carlo simulation (10,000 iterations) gives a range of $28.98 (P10) to $39.71 (P90), with a median of $34.33.
LUV's current P/E of 49.1x compares to the industry median of 12.6x (6 peers in the group). This represents a +290.2% premium to the industry. The historical average P/E is 35.5x over 6 years. Signal: High Premium.
45 analysts cover LUV with a consensus rating of Hold. The consensus price target is $49.89 (range: $32.00 — $73.00), implying +28.7% upside from the current price. Grade breakdown: Strong Buy (0), Buy (19), Hold (21), Sell (5), Strong Sell (0).
The model confidence score is 65/100, based on: data completeness (18), peer quality (25), historical depth (20), earnings stability (8), and model agreement (4). Cyclicality penalty: --10 points. The model shows moderate agreement across inputs.
The model flags several key risks: (1) Multiple compression: LUV trades at the 8890th percentile of its historical P/E range. A reversion to median (35.5×) would imply significant downside. (2) Macro/regulatory risks are not captured in this model but remain material.
Peak earnings risk data is not available for LUV.
No. This dashboard is a quantitative research tool for educational and informational purposes only. It is not investment advice, a solicitation, or a recommendation to buy, sell, or hold any security. The operator of this platform is not a registered investment advisor (RIA), broker-dealer, or financial planner. All model outputs, fair value estimates, signals, and scenarios are the result of automated quantitative computations and should not be construed as professional financial guidance. You should consult a qualified, licensed financial advisor before making any investment decisions. Past model performance is not indicative of future results.