LUV Relative Valuation
LUV's fair value is calculated using relative valuation, based on historical P/E and P/S ranges and their premiums/discounts relative to a competitor average, adjusted by weights. If the market price exceeds this fair value range, LUV is overvalued; if below, it's undervalued.
Historical Valuation
Southwest Airlines Co (LUV) is now in the Fair zone, suggesting that its current forward PE ratio of 14.29 is considered Fairly compared with the five-year average of 27.88. The fair price of Southwest Airlines Co (LUV) is between 16.42 to 121.66 according to relative valuation methord.
Relative Value
Fair Zone
16.42-121.66
Current Price：35.68
Fair
14.34
PE
1Y
3Y
5Y
Trailing
Forward
6.32
EV/EBITDA
Southwest Airlines Co. (LUV) has a current EV/EBITDA of 6.32. The 5-year average EV/EBITDA is -15.81. The thresholds are as follows: Strongly Undervalued below -217.51, Undervalued between -217.51 and -116.66, Fairly Valued between 85.05 and -116.66, Overvalued between 85.05 and 185.90, and Strongly Overvalued above 185.90. The current Forward EV/EBITDA of 6.32 falls within the Historic Trend Line -Fairly Valued range.
12.51
EV/EBIT
Southwest Airlines Co. (LUV) has a current EV/EBIT of 12.51. The 5-year average EV/EBIT is 77.58. The thresholds are as follows: Strongly Undervalued below -462.66, Undervalued between -462.66 and -192.54, Fairly Valued between 347.70 and -192.54, Overvalued between 347.70 and 617.82, and Strongly Overvalued above 617.82. The current Forward EV/EBIT of 12.51 falls within the Historic Trend Line -Fairly Valued range.
0.62
PS
Southwest Airlines Co. (LUV) has a current PS of 0.62. The 5-year average PS is 0.93. The thresholds are as follows: Strongly Undervalued below 0.02, Undervalued between 0.02 and 0.48, Fairly Valued between 1.39 and 0.48, Overvalued between 1.39 and 1.85, and Strongly Overvalued above 1.85. The current Forward PS of 0.62 falls within the Historic Trend Line -Fairly Valued range.
6.29
P/OCF
Southwest Airlines Co. (LUV) has a current P/OCF of 6.29. The 5-year average P/OCF is 4.98. The thresholds are as follows: Strongly Undervalued below -45.33, Undervalued between -45.33 and -20.17, Fairly Valued between 30.14 and -20.17, Overvalued between 30.14 and 55.29, and Strongly Overvalued above 55.29. The current Forward P/OCF of 6.29 falls within the Historic Trend Line -Fairly Valued range.
48.46
P/FCF
Southwest Airlines Co. (LUV) has a current P/FCF of 48.46. The 5-year average P/FCF is -712.47. The thresholds are as follows: Strongly Undervalued below -6683.87, Undervalued between -6683.87 and -3698.17, Fairly Valued between 2273.23 and -3698.17, Overvalued between 2273.23 and 5258.93, and Strongly Overvalued above 5258.93. The current Forward P/FCF of 48.46 falls within the Historic Trend Line -Fairly Valued range.
Southwest Airlines Co (LUV) has a current Price-to-Book (P/B) ratio of 2.37. Compared to its 3-year average P/B ratio of 1.80 , the current P/B ratio is approximately 31.88% higher. Relative to its 5-year average P/B ratio of 2.20, the current P/B ratio is about 7.88% higher. Southwest Airlines Co (LUV) has a Forward Free Cash Flow (FCF) yield of approximately 0.00%. Compared to its 3-year average FCF yield of -5.21%, the current FCF yield is approximately -100.00% lower. Relative to its 5-year average FCF yield of -2.15% , the current FCF yield is about -100.00% lower.
2.38
P/B
Median3y
1.80
Median5y
2.20
-1.36
FCF Yield
Median3y
-5.21
Median5y
-2.15
Competitors Valuation Multiple
The average P/S ratio for LUV's competitors is , providing a benchmark for relative valuation. Southwest Airlines Co Corp (LUV) exhibits a P/S ratio of , which is NaN% above the industry average. Given its robust revenue growth of 1.15%, this premium appears unsustainable.
P/S
P/E
EV/EBITDA
EV/EBIT
P/S
Revenue Growth
Market Cap
Performance Decomposition
1Y
3Y
5Y
Market capitalization of LUV increased by 6.51% over the past 1 year. The primary factor behind the change was an increase in P/E Change from 42.82 to 53.85.
The secondary factor is the Revenue Growth, contributed 1.15%to the performance.
Overall, the performance of LUV in the past 1 year is driven by P/E Change. Which is more unsustainable.
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FAQ
Is Southwest Airlines Co (LUV) currently overvalued or undervalued?
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What is the current Forward P/E ratio for Southwest Airlines Co (LUV) as of Dec 05 2025?