Southwest Airlines (LUV)
Industrials · $20.6B market cap · SEC CIK 0000092380
fundamentals score out of 100
Next reports on Oct 21, 2026, with analysts expecting $0.61 in earnings per share.
The case for LUV
- Revenue growing 9.5% year over year.
- Earnings per share up 141.5%.
- Pays a 2.9% dividend while you wait.
- A PEG of 0.17: a P/E of 24.6× is low for EPS growing 142%.
- Has compounded revenue at 25.4% a year over five years.
- Gross margin of 71% absorbs cost shocks.
The case against
- Burned $831M of free cash in FY2025.
- Growth is slowing: revenue up 9.5% this year against 25.4% a year over five.
- Net margin of 2.8% leaves very little room for error.
- Current liabilities exceed current assets (ratio 0.49).
- Dividend takes 113% of earnings, leaving little cushion.
- Free-cash-flow yield of -4.0% is lower than 100% of Industrials companies.
What the score is made of
Each factor is half a curve over reported figures and half a rank among the other Industrials companies (momentum is judged against fixed thresholds only), and the five are blended by weight. It describes the last filing and the current price. It is not a forecast.
| Valuewhat you pay for the earnings, sales, assets and cash | 53 |
|---|---|
| Growthhow fast revenue and earnings are moving, this year and over five | 90 |
| Profitabilityhow much of the revenue becomes profit, and how much of that is cash | 21 |
| Momentumhow the price has behaved lately | 50 |
| Stabilityhow violently it moves, what it owes and what it pays you | 46 |
- Each factor except momentum is half fixed thresholds, half rank among the 79 Industrials companies.
Key numbers
| Price / earnings | 24.6× |
|---|---|
| Price / book | 3.55× |
| Price / sales | 0.7× |
| Revenue growth (YoY) | +9.5% |
| EPS growth (YoY) | +141.5% |
| Gross margin | 71% |
| Operating margin | 3% |
| Net margin | 3% |
| Return on equity | 11% |
| Debt / equity | 0.84× |
| Current ratio | 0.49 |
| Dividend yield | 2.90% |
| Beta | 1.25 |
| 52-week range | $29.26 – $55.11 |
| Position in that range | 50% of the way up |
| 3-month return | -12.9% |
| 1-year return | +28.4% |
Five years of financials, as filed
Pulled from Southwest Airlines's XBRL filings on SEC EDGAR. Italic rows are derived from the rows above.
| FY2025 | FY2024 | FY2023 | FY2022 | FY2021 | |
|---|---|---|---|---|---|
| Revenue | $28.1B | $27.5B | $26.1B | $23.8B | $15.8B |
| Operating income | $428M | $321M | $224M | $1.0B | $1.7B |
| Net income | $441M | $465M | $465M | $539M | $977M |
| Operating cash flow | $1.8B | $462M | $3.2B | $3.8B | $2.3B |
| Capital expenditure | $2.7B | $2.1B | $3.5B | $3.9B | $505M |
| Total assets | $29.1B | $33.8B | $36.5B | $35.4B | $36.3B |
| Shareholder equity | $8.0B | $10.3B | $10.5B | $10.7B | $10.4B |
| Cash | $3.2B | $7.5B | $9.3B | $9.5B | $12.5B |
| Long-term debt | $4.9B | $6.7B | $8.0B | $8.1B | — |
| Free cash flow | -$831M | -$1.6B | -$356M | -$134M | $1.8B |
| Operating margin | 1.5% | 1.2% | 0.9% | 4.3% | 10.9% |
| Net margin | 1.6% | 1.7% | 1.8% | 2.3% | 6.2% |
| Diluted shares | 558M | 643M | 640M | 642M | 609M |
Share count is down 8.4% over 4 years. Buybacks have been shrinking the pie.
What Southwest Airlines says it does
Company Overview Southwest Airlines Co. (the "Company" or "Southwest") operates Southwest Airlines, a major passenger airline that provides scheduled air transportation in the United States and near-international markets. Southwest commenced service on June 18, 1971, with three Boeing 737 aircraft serving three Texas cities: Dallas, Houston, and San Antonio. Southwest’s unique route network, competitive fares, and famous Hospitality continue to make the Company an attractive choice for Customers in cities across the United States and near-international destinations. As of December 31, 2025, Southwest had a total of 803 Boeing 737 aircraft in its fleet and served 117 destinations in 42 states, the District of Columbia, the Commonwealth of Puerto Rico, and ten near-international countries: Mexico, Jamaica, The Bahamas, Aruba, Dominican Republic, Costa Rica, Belize, Cuba, the Cayman Islands, and Turks and Caicos. Company Initiatives As…
Risk factors LUV lists in its 10-K
- Information Technology, Cybersecurity, and Data Privacy Risks
- Legal, Regulatory, Compliance, and Reputational Risks
- The Company's low-cost structure has historically been one of its primary competitive advantages, and many factors have adversely affected and could continue to adversely affect the Company's ability to control its costs
- Increases in insurance costs or reductions in insurance coverage may adversely impact the Company’s operations and financial results
- The Company’s business, operating results, and financial condition could be adversely impacted if it is unable to effectively execute its strategic plans
- The airline industry is intensely competitive
- The Company may not be able to procure aircraft in the future in a timely manner or on favorable commercial terms, which could limit the Company’s growth or negatively affect the Company’s cost structure and competitive position
- Introducing a new aircraft manufacturer or fleet type could impose significant operational complexities, regulatory requirements, and costs on the Company
- Interruptions or disruptions in service at one of the Company’s core stations have had, and could in the future have, a material adverse impact on its operations
- The airline industry is made up of inherently complex systems and is affected by many conditions that are beyond its control, which can impact the Company's business strategies and results of operations
- Airport capacity constraints and air traffic control inefficiencies have limited and could continue to limit the Company's growth
- The Company is subject to risks related to its sustainability goals and disclosures, which may affect stakeholder sentiment and the Company’s reputation and brand
- The Company’s future results may suffer if it is unable to effectively manage its current and contemplated international operations or Extended Operations ("ETOPS")
- The Company’s plans to develop commercial relationships with airlines in other parts of the world may not produce the results or returns it expects