Southwest Airlines Company
NYSE: LUV · INDUSTRIALS · AIRLINES
Updated 2026-06-05
Southwest Airlines Company (LUV) Stock Valuation Analysis
Fair value estimate, historical valuation range, and quality signals for LUV.
Valued
Valuation reasonably reflects current fundamentals. Limited margin of safety at these levels.
LUV historical valuation range
Where current P/E sits in LUV's own 5Y range.
LUV intrinsic value (DCF)
DCF-based fair value estimate vs current market price.
Standard discounted cash flow models produce unreliable output for unprofitable or near-breakeven companies. Revenue-based multiples such as P/S and EV/Sales, combined with the historical valuation position above, give a more reliable read for this stock.
Intrinsic value calculated using discounted cash flow (DCF) model based on projected free cash flows, discount rate, and terminal growth assumptions. A positive margin of safety indicates the current price is below estimated fair value, providing a cushion against estimation error.
LUV valuation signals
Quick-read green flags, caution flags, and risks based on current metrics.
P/E Ratio — History
Current: 30.31x
P/S Ratio — History
Current: 0.77x
Is LUV overvalued in 2026?
Southwest Airlines Company (LUV) currently trades at $39.99 per share with a market capitalization of $22,224,542,000.00. Based on our multi-factor framework, the stock trades at a fair valuation with a Smart Value Score of 66/100. This score blends growth quality, financial health, and price attractiveness into a single institutional-grade read.
The stock trades at a P/E ratio of 30.3x, below its 5-year median of 39.5x. The PEG ratio of 0.31 suggests earnings growth is outpacing the multiple, a classic sign of undervaluation.
Looking at its own history, LUV is currently trading cheaper than 60% of the last 5Y on P/E. This places it in the 40th percentile of its historical range, a reasonable but unremarkable position.
A standard DCF model does not produce reliable output for LUV under current conditions. For unprofitable or near-breakeven companies, revenue-based multiples such as EV/Sales and historical P/S percentile are more informative than intrinsic value calculations.
The Piotroski F-Score of 6/9 puts financial quality in a middling range, neither a standout strength nor an obvious red flag.
Bottom line: LUV trades at a fair valuation on our framework, with a Smart Value Score of 66/100. The valuation is defensible but offers no obvious bargain. Patience or a better entry price may reward disciplined buyers.
Frequently asked questions
Is LUV overvalued?
LUV scores 66/100 on our Smart Value Score (Grade B), a mixed overall profile. A standard DCF is unreliable here given the profitability profile, so valuation leans on revenue-based measures like EV/Sales and the P/S percentile below.
What is LUV's fair value?
A standard DCF is unreliable for LUV given its current profitability profile. Revenue-based approaches like EV/Sales or the historical P/S percentile are more informative for this stock.
What P/E ratio does LUV trade at?
LUV trades at a P/E of 30.3x on trailing twelve-month earnings, against a 5-year median of 39.5x. P/E is what you pay per dollar of profit, and sitting below its own median means the stock is cheaper than usual relative to its earnings.
Is LUV a buy based on valuation?
Our Smart Value rating for LUV is Buy, from a Smart Value Score of 66/100 that blends growth, quality, and valuation. The profile is balanced and best suited to investors who already have a thesis. This is research to inform your decision, not personalized financial advice.
How does LUV's valuation compare to its history?
On P/E, LUV sits in the 40th percentile of its own 5Y range, below its long-run median relative to where it has traded. A low percentile means today's multiple is near the bottom of its historical band.
What is LUV's Smart Value Score?
LUV's Smart Value Score is 66/100. It is a proprietary WallStSmart metric blending growth quality, financial health, and valuation into a single 0-100 read, and scores above 75 are rare, signaling strong multi-factor alignment.