LUV PE Ratio & Valuation,Is LUV Overvalued

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 16.14 is considered Fairly compared with the five-year average of 28.04. The fair price of Southwest Airlines Co (LUV) is between 10.55 to 117.27 according to relative valuation methord.

Relative Value

Fair Zone

10.55-117.27

Current Price：41.17

Fair

16.14

7.17

EV/EBITDA

Southwest Airlines Co. (LUV) has a current EV/EBITDA of 7.17. The 5-year average EV/EBITDA is -15.57. The thresholds are as follows: Strongly Undervalued below -217.21, Undervalued between -217.21 and -116.39, Fairly Valued between 85.24 and -116.39, Overvalued between 85.24 and 186.06, and Strongly Overvalued above 186.06. The current Forward EV/EBITDA of 7.17 falls within the Historic Trend Line -Fairly Valued range.

14.58

EV/EBIT

Southwest Airlines Co. (LUV) has a current EV/EBIT of 14.58. The 5-year average EV/EBIT is 77.68. The thresholds are as follows: Strongly Undervalued below -462.27, Undervalued between -462.27 and -192.29, Fairly Valued between 347.65 and -192.29, Overvalued between 347.65 and 617.63, and Strongly Overvalued above 617.63. The current Forward EV/EBIT of 14.58 falls within the Historic Trend Line -Fairly Valued range.

0.71

Southwest Airlines Co. (LUV) has a current PS of 0.71. The 5-year average PS is 0.93. The thresholds are as follows: Strongly Undervalued below 0.03, Undervalued between 0.03 and 0.48, Fairly Valued between 1.38 and 0.48, Overvalued between 1.38 and 1.82, and Strongly Overvalued above 1.82. The current Forward PS of 0.71 falls within the Historic Trend Line -Fairly Valued range.

7.16

P/OCF

Southwest Airlines Co. (LUV) has a current P/OCF of 7.16. The 5-year average P/OCF is 6.02. The thresholds are as follows: Strongly Undervalued below -34.52, Undervalued between -34.52 and -14.25, Fairly Valued between 26.28 and -14.25, Overvalued between 26.28 and 46.55, and Strongly Overvalued above 46.55. The current Forward P/OCF of 7.16 falls within the Historic Trend Line -Fairly Valued range.

52.36

P/FCF

Southwest Airlines Co. (LUV) has a current P/FCF of 52.36. The 5-year average P/FCF is -711.58. The thresholds are as follows: Strongly Undervalued below -6680.88, Undervalued between -6680.88 and -3696.23, Fairly Valued between 2273.07 and -3696.23, Overvalued between 2273.07 and 5257.73, and Strongly Overvalued above 5257.73. The current Forward P/FCF of 52.36 falls within the Historic Trend Line -Fairly Valued range.

Southwest Airlines Co (LUV) has a current Price-to-Book (P/B) ratio of 2.74. Compared to its 3-year average P/B ratio of 1.80 , the current P/B ratio is approximately 51.79% higher. Relative to its 5-year average P/B ratio of 2.20, the current P/B ratio is about 24.51% higher. Southwest Airlines Co (LUV) has a Forward Free Cash Flow (FCF) yield of approximately -1.18%. Compared to its 3-year average FCF yield of -5.27%, the current FCF yield is approximately -77.63% lower. Relative to its 5-year average FCF yield of -2.15% , the current FCF yield is about -45.06% lower.

2.74

P/B

Median3y

1.80

Median5y

2.20

-1.18

FCF Yield

Median3y

-5.27

Median5y

-2.15

Competitors Valuation Multiple

The average P/S ratio for LUV's competitors is 0.42, providing a benchmark for relative valuation. Southwest Airlines Co Corp (LUV) exhibits a P/S ratio of 0.71, which is 69.73% above the industry average. Given its robust revenue growth of 1.15%, this premium appears unsustainable.

P/S

P/E

EV/EBITDA

EV/EBIT

Revenue Growth

Market Cap

Performance Decomposition

Market capitalization of LUV increased by 22.46% over the past 1 year. The primary factor behind the change was an increase in P/E Change from 43.67 to 61.89.

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.

1.15%

6.87B → 6.95B

Revenue Growth

-20.41%

0.98 → 0.78

Margin Expansion

41.72%

43.67 → 61.89

P/E Change

22.46%

33.62 → 41.17

Mkt Cap Growth

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Frequently Asked Questions

Is Southwest Airlines Co (LUV) currently overvalued or undervalued?

What is Southwest Airlines Co (LUV) fair value?

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. The fair price of Southwest Airlines Co (LUV) is between 10.55 to 117.27 according to relative valuation methord.

How does LUV's valuation metrics compare to the industry average?

What is the current P/B ratio for Southwest Airlines Co (LUV) as of Dec 15 2025?

As of Dec 15 2025, Southwest Airlines Co (LUV) has a P/B ratio of 2.74. This indicates that the market values LUV at 2.74 times its book value.

What is the current FCF Yield for Southwest Airlines Co (LUV) as of Dec 15 2025?

As of Dec 15 2025, Southwest Airlines Co (LUV) has a FCF Yield of -1.18%. This means that for every dollar of Southwest Airlines Co’s market capitalization, the company generates -1.18 cents in free cash flow.

What is the current Forward P/E ratio for Southwest Airlines Co (LUV) as of Dec 15 2025?

As of Dec 15 2025, Southwest Airlines Co (LUV) has a Forward P/E ratio of 16.14. This means the market is willing to pay $16.14 for every dollar of Southwest Airlines Co’s expected earnings over the next 12 months.

What is the current Forward P/S ratio for Southwest Airlines Co (LUV) as of Dec 15 2025?

As of Dec 15 2025, Southwest Airlines Co (LUV) has a Forward P/S ratio of 0.71. This means the market is valuing LUV at $0.71 for every dollar of expected revenue over the next 12 months.

LUV Valuation