LUV Southwest Airlines Co. - Fundamental Analysis
BEARISH
LUV Stock | Fundamental Analysis & Investment Insights
NYSE
•
Industrials
•
Airlines
Current Price
$41.3
Analyst Target
$37.93
-8.2% Downside
52W High
$43.54
52W Low
$23.82
At a glance
Key valuation, profitability, growth, and risk metrics.
AI Analysis
Powered by advanced machine learning algorithms
Confidence Score
85%
Analysis Accuracy
The Advanced Deterministic Scorecard reveals significant concerns: a weak Piotroski F-Score of 4/9 indicates marginal financial health, while the Altman Z-Score, though astronomically high at 59.1 billion, appears to be a data anomaly and cannot be trusted as a valid indicator of financial stability. Profitability metrics are alarmingly low, with a mere 1.38% net margin and negative earnings growth, while the P/E of 65.56 is exceptionally high relative to peers and fundamentals. Despite recent price strength, the company faces deteriorating earnings, poor capital efficiency, and an unsustainable dividend payout ratio above 100%. The combination of overvaluation, weak profitability, and negative insider activity suggests substantial downside risk.
Key Strengths
Recent quarterly earnings have frequently beaten estimates, showing operational execution above expectations in several periods.
Debt/Equity ratio of 0.68 is below sector average of 1.56, indicating conservative leverage relative to peers.
Dividend yield of 1.74% provides modest income appeal in a low-yield environment.
Market capitalization of $21.69B reflects a large, established player with scale advantages in the airline industry.
Price/Sales of 0.79 is below sector average, suggesting potential revenue-based undervaluation.
Key Risks
Piotroski F-Score of 4/9 signals weak financial health, particularly concerning for a capital-intensive industry like airlines.
Profitability is severely compressed: ROE of 4.17% and ROA of 0.71% are far below sector averages of 32.90% and imply inefficient asset utilization.
Earnings are deteriorating: YoY EPS growth of -26.7% and Q/Q decline of -74.4% indicate a sharp negative trend.
P/E ratio of 65.56 is extremely high relative to forward P/E of 14.34, suggesting current earnings are depressed and future expectations may be overpriced.
Dividend payout ratio of 114.29% is unsustainable, indicating dividends are being paid from debt or reserves rather than earnings.
AI Fair Value Estimate
Based on comprehensive analysis
$14.6
-64.6% below current price
Performance Snowflake
Multi-dimensional AI analysis across 5 key categories
Stock Price & Analyst Targets
Real-time price movements and analyst price targets
Historical Performance Trends
Long-term financial metrics and growth patterns
Valuation Metrics
Key valuation ratios and pricing indicators
Profitability, Growth & Financial Health
Detailed profit margins, ROE, debt ratios, and liquidity metrics
Sector Comparison & Peer Analysis
Compare LUV against industry averages and similar companies
Insider Trading & Analyst Ratings
Track insider transactions and Wall Street analyst recommendations