Southwest Airlines Valuation

LUV Stock  USD 29.19  0.08  0.27%   
At this time, the company appears to be undervalued. Southwest Airlines has a current Real Value of $30.43 per share. The regular price of the company is $29.19. Our model measures the value of Southwest Airlines from inspecting the company fundamentals such as Return On Equity of 0.0439, operating margin of 0.04 %, and Shares Outstanding of 596.67 M as well as reviewing its technical indicators and probability of bankruptcy. In general, most investors recommend buying undervalued stocks and disposing overvalued stocks since, at some point, asset prices and their ongoing real values will draw towards each other.
Price Book
1.6564
Enterprise Value
15.1 B
Enterprise Value Ebitda
6.3332
Price Sales
0.6675
Forward PE
19.8413
Undervalued
Today
29.19
Please note that Southwest Airlines' price fluctuation is very steady at this time. Calculation of the real value of Southwest Airlines is based on 3 months time horizon. Increasing Southwest Airlines' time horizon generally increases the accuracy of value calculation and significantly improves the predictive power of the methodology used.
Our valuation method for Southwest Airlines is useful when determining the fair value of the Southwest stock, which is usually determined by what a typical buyer is willing to pay for full or partial control of Southwest Airlines. Since Southwest Airlines is currently traded on the exchange, buyers and sellers on that exchange determine the market value of Southwest Stock. However, Southwest Airlines' intrinsic value may or may not be the same as its current market price, in which case there is an opportunity to profit from the mispricing, assuming the market price will eventually merge with its intrinsic value.
Historical Market  29.19 Real  30.43 Target  30.77 Hype  29.19 Naive  30.88
The real value of Southwest Stock, also known as its intrinsic value, is the underlying worth of Southwest Airlines Company, which is reflected in its stock price. It is based on Southwest Airlines' financial performance, assets, liabilities, growth prospects, management team, or industry conditions. The intrinsic value of Southwest Airlines' stock can be calculated using various methods such as discounted cash flow analysis, price-to-earnings ratio, or price-to-book ratio. That value may differ from its current market price, which is determined by supply and demand factors such as investor sentiment, market trends, news, and other external factors that may influence Southwest Airlines' stock price. It is important to note that the real value of any stock may change over time based on changes in the company's performance.
30.43
Real Value
33.19
Upside
Estimating the potential upside or downside of Southwest Airlines helps investors to forecast how Southwest stock's addition to their portfolios will impact the overall performance. We also use other valuation drivers to help us estimate the true value of Southwest Airlines more accurately as focusing exclusively on Southwest Airlines' fundamentals will not take into account other important factors:
Earnings
Estimates (0)
LowProjectedHigh
-0.5-0.310.03
Details
Hype
Prediction
LowEstimatedHigh
26.4329.1931.95
Details
Potential
Annual Dividend
LowForecastedHigh
0.350.360.37
Details
21 Analysts
Consensus
LowTarget PriceHigh
28.0030.7734.15
Details

Southwest Airlines Investments

(3.04 Billion)

Southwest Airlines Valuation Ratios as Compared to Competition

Comparative valuation techniques use various fundamental indicators to help in determining Southwest Airlines's current stock value. Our valuation model uses many indicators to compare Southwest Airlines value to that of its competitors to determine the firm's financial worth. You can analyze the relationship between different fundamental ratios across Southwest Airlines competition to find correlations between indicators driving Southwest Airlines's intrinsic value. More Info.
Southwest Airlines is rated third overall in last dividend paid category among related companies. It is rated below average in beta category among related companies totaling about  1.62  of Beta per Last Dividend Paid. . Comparative valuation analysis is a catch-all model that can be used if you cannot value Southwest Airlines by discounting back its dividends or cash flows. This model doesn't attempt to find an intrinsic value for Southwest Airlines' Stock . Still, instead, it compares the stock's price multiples to a benchmark or nearest competition to determine if the stock is relatively undervalued or overvalued. The reason why the comparable model can be used in almost all circumstances is due to the vast number of multiples that can be utilized, such as the price-to-earnings (P/E), price-to-book (P/B), price-to-sales (P/S), price-to-cash flow (P/CF), and many others. The P/E ratio is the most commonly used of these ratios because it focuses on the Southwest Airlines' earnings, one of the primary drivers of an investment's value.
Please note that valuation analysis is one of the essential comprehensive assessments in business. It evaluates Southwest Airlines' worth, which you can determine by considering its current assets, liabilities and future cash flows. The investors' valuation analysis is an important metric that will give you a perspective on different companies. It helps you know the worth of the potential investment in Southwest Airlines and how it compares across the competition.

About Southwest Airlines Valuation

The stock valuation mechanism determines the current worth of Southwest Airlines on a weekly basis. We use both absolute as well as relative valuation methodologies to arrive at the intrinsic value of Southwest Airlines. In general, an absolute valuation paradigm, as applied to this company, attempts to find the value of Southwest Airlines based exclusively on its fundamental and basic technical indicators. By analyzing Southwest Airlines's financials, quarterly and monthly indicators, and its related drivers such as dividends, operating cash flow, and various types of growth rates, we attempt to find the most accurate representation of Southwest Airlines's intrinsic value. In some cases, mostly for established, large-cap companies, we also incorporate more traditional valuation methods such as dividend discount, discounted cash flow, or asset-based models. As compared to an absolute model, our relative valuation model uses a comparative analysis of Southwest Airlines. We calculate exposure to Southwest Airlines's market risk, different technical and fundamental indicators, relevant financial multiples and ratios, and then comparing them to Southwest Airlines's related companies.
Last ReportedProjected for 2024
Gross Profit4.2 B3.5 B
Pretax Profit Margin 0.02  0.02 
Operating Profit Margin 0.01  0.01 
Net Profit Margin 0.02  0.02 
Gross Profit Margin 0.16  0.15 

Southwest Airlines Quarterly Retained Earnings

16.3 Billion

8 Steps to conduct Southwest Airlines' Valuation Analysis

Company's valuation is the process of determining the worth of any company in monetary terms. It estimates Southwest Airlines' potential worth based on factors such as financial performance, market conditions, growth prospects, and overall economic environment. The result of company valuation is a single number representing a Company's current market value. This value can be used as a benchmark for various financial transactions such as mergers and acquisitions, initial public offerings (IPOs), or private equity investments. To conduct Southwest Airlines' valuation analysis, follow these 8 steps:
  • Gather financial information: Obtain Southwest Airlines' financial statements, including balance sheets, income statements, and cash flow statements.
  • Determine Southwest Airlines' revenue streams: Identify Southwest Airlines' primary sources of revenue, including products or services offered, target markets, and pricing strategies.
  • Analyze market data: Research Southwest Airlines' industry and market trends, including the size of the market, growth rate, and competition.
  • Establish Southwest Airlines' growth potential: Evaluate Southwest Airlines' management, business model, and growth potential.
  • Determine Southwest Airlines' financial performance: Analyze its financial statements to assess its historical performance and future potential.
  • Choose a valuation method: Consider the Company's specific circumstances and choose an appropriate valuation method, such as the discounted cash flow (DCF) or comparable analysis method.
  • Calculate the value: Apply the chosen valuation method to the financial information and market data to calculate Southwest Airlines' estimated value.
  • Review and adjust: Review the results and make necessary adjustments, considering any relevant factors that may have been missed or overlooked.
Note: This is a general outline, and different approaches and methods may be used depending on the type and size of the company being valued. We also recomment to seek professional assistance to ensure accuracy.
Southwest Airlines' stock price is the clearest measure of market expectations about its performance. Without stock valuation, investors cannot independently discern whether Southwest Airlines' value is low or high relative to the company's performance and growth projections. Determining the market value of Southwest Airlines can be done in different ways, such as multiplying its stock price by its outstanding shares.
A single share of Southwest Airlines represents a small ownership stake in the entity. As a stockholder of Southwest, your percentage of company ownership is determined by dividing the number of shares you own by the total number of shares outstanding and then multiplying that amount by 100. Owning stock in a company generally confers both corporate voting rights and income from any dividends paid to the stock owner.

Southwest Airlines Dividends Analysis For Valuation

At this time, Southwest Airlines' Dividend Yield is fairly stable compared to the past year. Dividend Payout Ratio is likely to climb to 0.87 in 2024, despite the fact that Dividends Paid is likely to grow to (406.6 M). . At this time, Southwest Airlines' Retained Earnings are fairly stable compared to the past year. Price Earnings Ratio is likely to climb to 41.74 in 2024, whereas Retained Earnings Total Equity is likely to drop slightly above 11.2 B in 2024.
Last ReportedProjected for 2024
Dividends Paid-428 M-406.6 M
Dividend Yield 0.02  0.02 
Dividend Payout Ratio 0.83  0.87 
Dividend Paid And Capex Coverage Ratio(1.01)(1.06)
There are various types of dividends Southwest Airlines can pay to its shareholders, and the actual value of the dividend is determined on a per-share basis. It is to be paid equally to all of Southwest shareholders on a specific date, known as the payable date. The cash dividend is the most common type of dividend payment - it is the payment of actual cash from Southwest Airlines directly to its shareholders. There are other types of dividends that companies can issue, such as stock dividends or asset dividends. When Southwest pays a dividend, it has no impact on its enterprise value. It does, however, lowers the Equity Value of Southwest Airlines by the value of the dividends paid out.

Southwest Airlines Growth Indicators

Growth stocks usually refer to those companies expected to grow sales and earnings faster than the market average. Growth stocks typically don't pay dividends, often look expensive, and usually trading at a high P/E ratio. Nevertheless, such valuations could be relatively cheap if the company continues to grow, which will drive the share price up. However, since most investors are paying a high price for a growth stock, based on expectations, if those expectations are not fully realized, growth stocks can see dramatic declines. Note, investing in growth stocks can be very risky. If the company such as Southwest Airlines does not do well, investors take a loss on the stock when it is time to sell. Also, because growth stocks typically do not pay dividends, the only opportunity an investor has to make money on their investment is when they eventually sell their shares.
Common Stock Shares Outstanding640 M
Quarterly Earnings Growth Y O Y-0.299
Forward Price Earnings19.8413

Southwest Airlines Current Valuation Indicators

Valuation refers to the process of determining the present value of Southwest Airlines and all of its assets. It can be calculated using a number of techniques. As many analysts who try to value Southwest we look at many different elements of the entity such as Southwest's management, its prospective future earnings, the current market value of the company's assets, as well as its capital structure formation. Southwest Airlines' valuation analysis is also a process of estimating the intrinsic value of all assets and outstanding equities. There are different methodologies and models we use to develop the final Southwest Airlines' valuation. The techniques such as discounted cash flow and fundamental indicators such as book value per share or market capitalization are well known and widely used across most financial advisers and money managers.
Valuations are an essential part of business, for companies themselves, but also for investors. For companies, such as Southwest Airlines, valuations can help measure their progress and success and can help them track their performance in the market compared to others. In addition, investors can use Southwest Airlines' valuations to help determine the worth of potential investments. They can do this by using data and information made public by a company. Regardless of who the valuation is for, it essentially describes Southwest Airlines' worth.
When determining whether Southwest Airlines is a strong investment it is important to analyze Southwest Airlines' competitive position within its industry, examining market share, product or service uniqueness, and competitive advantages. Beyond financials and market position, potential investors should also consider broader economic conditions, industry trends, and any regulatory or geopolitical factors that may impact Southwest Airlines' future performance. For an informed investment choice regarding Southwest Stock, refer to the following important reports:
Check out Correlation Analysis to better understand how to build diversified portfolios, which includes a position in Southwest Airlines. Also, note that the market value of any company could be tightly coupled with the direction of predictive economic indicators such as signals in employment.
For more information on how to buy Southwest Stock please use our How to Invest in Southwest Airlines guide.
You can also try the AI Investment Finder module to use AI to screen and filter profitable investment opportunities.

Complementary Tools for Southwest Stock analysis

When running Southwest Airlines' price analysis, check to measure Southwest Airlines' market volatility, profitability, liquidity, solvency, efficiency, growth potential, financial leverage, and other vital indicators. We have many different tools that can be utilized to determine how healthy Southwest Airlines is operating at the current time. Most of Southwest Airlines' value examination focuses on studying past and present price action to predict the probability of Southwest Airlines' future price movements. You can analyze the entity against its peers and the financial market as a whole to determine factors that move Southwest Airlines' price. Additionally, you may evaluate how the addition of Southwest Airlines to your portfolios can decrease your overall portfolio volatility.
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Is Southwest Airlines' industry expected to grow? Or is there an opportunity to expand the business' product line in the future? Factors like these will boost the valuation of Southwest Airlines. If investors know Southwest will grow in the future, the company's valuation will be higher. The financial industry is built on trying to define current growth potential and future valuation accurately. All the valuation information about Southwest Airlines listed above have to be considered, but the key to understanding future value is determining which factors weigh more heavily than others.
Quarterly Earnings Growth
(0.30)
Dividend Share
0.72
Earnings Share
0.76
Revenue Per Share
43.85
Quarterly Revenue Growth
0.105
The market value of Southwest Airlines is measured differently than its book value, which is the value of Southwest that is recorded on the company's balance sheet. Investors also form their own opinion of Southwest Airlines' value that differs from its market value or its book value, called intrinsic value, which is Southwest Airlines' true underlying value. Investors use various methods to calculate intrinsic value and buy a stock when its market value falls below its intrinsic value. Because Southwest Airlines' market value can be influenced by many factors that don't directly affect Southwest Airlines' underlying business (such as a pandemic or basic market pessimism), market value can vary widely from intrinsic value.
Please note, there is a significant difference between Southwest Airlines' value and its price as these two are different measures arrived at by different means. Investors typically determine if Southwest Airlines is a good investment by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, Southwest Airlines' price is the amount at which it trades on the open market and represents the number that a seller and buyer find agreeable to each party.