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Verdict
Quantitative factor alignment verified for current market regime.
Quant Score
Rank
#1482
Positioning
Market Dominance
Transportation, Communications, Electric, Gas, And Sanitary Services
Transportation
$16.8B
Robert E. Jordan
Southwest Airlines Co. operates as a passenger airline company that provide scheduled air transportation services in the United States and near-international markets. As of December 31, 2021, the company operated a total fleet of 728 Boeing 737 aircrafts; and served 121 destinations in 42 states, the District of Columbia, and the Commonwealth of Puerto Rico.
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Dates updated upon official exchange announcement.
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| Stock | Rating | Score▼ | Quality | Value | Momentum | P/E | EV/EBITDA | ROE | ROA | Gross Mgn | Op Mgn | Net Mgn | Rev Growth | Div Yield | D/E | Mkt Cap | AUDIT |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
$UGP ULTRAPAR HOLDINGS INC | 79 | 90 | 95 | 87 | - | - | - | - | - | - | - | - | - | - | $0 | VS | |
$TNK TEEKAY TANKERS LTD. | 78 | 94 | 97 | 82 | - | - | - | - | - | - | - | - | - | - | $0 | VS | |
$DHT DHT Holdings, Inc. | 75 | 84 | 88 | 78 | - | - | - | - | - | - | - | - | - | - | $0 | VS | |
$STNG Scorpio Tankers Inc. | 75 | 86 | 95 | 74 | - | - | - | - | - | - | - | - | - | - | $0 | VS | |
$NAT NORDIC AMERICAN TANKERS Ltd | 75 | 82 | 88 | 87 | - | - | - | - | - | - | - | - | - | - | $0 | VS | |
$AMX AMERICA MOVIL SAB DE CV/ | 74 | 86 | 81 | 68 | - | - | - | - | - | - | - | - | - | - | $0 | VS | |
$PAC Pacific Airport Group | 73 | 94 | 80 | 78 | - | - | - | - | - | - | - | - | - | - | $0 | VS | |
$GSL Global Ship Lease, Inc. | 73 | 82 | 94 | 81 | - | - | - | - | - | - | - | - | - | - | $0 | VS | |
$TRMD TORM plc | 73 | 86 | 94 | 65 | - | - | - | - | - | - | - | - | - | - | $0 | VS | |
$VIV TELEFONICA BRASIL S.A. | 73 | 82 | 90 | 78 | - | - | - | - | - | - | - | - | - | - | $0 | VS | |
$LUV SOUTHWEST AIRLINES CO | 53 | 40 | 37 | 87 | 138.3x | 17.9x | 2.3% | 0.6% | 30.0% | 0.2% | 0.6% | -5.5% | 2.3% | 62.0x | $16.8B | ||
| SECTOR BENCH | - | - | - | - | - | 16.9x | 6.1x | 11.9% | 3.2% | 52.6% | 14.8% | 7.7% | 4.2% | 1.4% | 1.3x | - | REF |
SOUTHWEST AIRLINES CO (LUV) receives a "Hold" rating with a composite score of 53.4/100. It ranks #1482 out of 7,333 stocks in our coverage universe and carries a 3-star rating. Ratings are driven by a 6-factor quantitative model measuring quality, value, momentum, investment, stability, and short interest.
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Outperforming peers — winners tend to keep winning over 3-12 months
Fair valuation relative to peers
Average quality profile
High volatility — wider range of outcomes increases timing risk
Moderate investment profile
Mid-range overall rating
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Relative valuation derived from Transportation, Communications, Electric, Gas, And Sanitary Services sector benchmarks. Model weights: EV/EBITDA (40%), P/B (35%), P/S (25%). Re-calculated daily.
Projection based on user-defined inputs. Re-calculated daily against current market data.
Reverse DCF Framework — Mauboussin Methodology
Institutional-grade Reverse DCF analysis. This model identifies the growth hurdles embedded in current market prices. When implied growth is significantly lower than historical or projected rates, a margin of safety may exist. Re-audited daily.
No analyst ratings for LUV.
View All Ratings| Factor | Global | Sector | Tilt |
|---|---|---|---|
| PROFITABILITY | 40 | 36 | +4NEUTRAL |
| MOMENTUM | 87 | 95 | -8DRAG |
| VALUATION | 37 | 35 | +2NEUTRAL |
| INVESTMENT | 47 | 80 | -33DRAG |
| STABILITY | 31 | 30 | +1NEUTRAL |
| SHORT INT | 38 | 32 | +6ALPHA |
Global = full universe. Sector = relative to industry peers. Positive tilt indicates idiosyncratic strength.
ROIC 14.8% vs WACC 8.2% (spread +6.5%)
GM 30% vs sector 53%, OM 0% vs sector 15%
Capital turnover 13.84x
Rev growth -6%, 10yr history
Interest coverage 19.5x, Net debt/EBITDA 1.0x
Composite assessment of profitability, capital efficiency, and financial strength. Top-tier entities demonstrate sustainable cash flow generation and elite competitive moats.
Profit generated per dollar of shareholder equity
Efficiency of asset utilization
Pricing power and cost efficiency
Core business profitability
Bottom-line profitability
The Quality factor evaluates the persistence and magnitude of realized cash flows. Companies with scores >70 exhibit superior pricing power and structural financial resilience through diverse economic regimes.
Our uncertainty rating tracks the predictability of future cash flows and potential for permanent capital loss. Moderate visibility with standard industry cyclicality.
We rate SOUTHWEST AIRLINES CO (LUV) as a Hold with a composite score of 53.4/100 at a current price of $50.57. The stock presents a mixed quantitative picture — neither compelling enough to warrant new accumulation nor weak enough to justify selling.
SOUTHWEST AIRLINES CO holds a top-quartile position (#0 of 50) within the Transportation, Communications, Electric, Gas, And Sanitary Services sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 53.4/100 places it at rank #1482 in our full universe.
The near-term outlook is constructive, with revenue growing at -6% and momentum in the 87th percentile confirming positive market sentiment. The combination of strong top-line growth and favorable price dynamics suggests the company is executing well on its growth strategy.
Narrow
High
Standard
Fair Value
Positive momentum indicates institutional accumulation.
Stable competitive position in a defensive sector.
Elevated P/E ratio of 138.3x leaves little room for execution misses.
Vulnerability to macroeconomic shocks and interest rate volatility.
SOUTHWEST AIRLINES CO represents a hold based on multi-factor quantitative performance.
Our model assigns SOUTHWEST AIRLINES CO a Hold rating, with a composite score of 53.4/100 and 3 out of 5 stars. Ranked #1482 of 7,333 stocks, LUV presents a mixed quantitative picture — neither compelling enough to initiate new positions nor weak enough to warrant selling. Investors already holding may consider maintaining their position while monitoring for changes in the factor profile.
LUV's quality score of 40/100 is below average, suggesting challenges with profitability or capital efficiency. The company reports a return on equity of 2.3% (sector avg: 11.9%), gross margins of 30.0% (sector avg: 52.6%), net margins of 0.6% (sector avg: 7.7%). Investors should examine whether management is actively addressing these weaknesses or if they reflect structural industry headwinds.
With a value score of 37/100, LUV appears somewhat expensive relative to its fundamentals. Key valuation metrics include a P/E ratio of 138.34x, an EV/EBITDA of 17.87x, a P/B ratio of 3.21x. Investors paying a premium here are likely betting on above-average growth or margin expansion to justify current prices.
With an investment score of 47/100, LUV exhibits moderate growth-oriented spending. Key growth metrics include revenue growth of -5.5% vs. a sector average of 4.2% and a return on assets of 0.6% (sector: 3.2%). The company appears to be balancing growth investments with capital returns, though the pace of investment may not be enough to accelerate top-line growth meaningfully.
LUV shows strong momentum characteristics with a score of 87/100. The stock has been trending above key moving averages, indicating solid demand from institutional buyers. Revenue growth stands at -5.5% year-over-year, while a beta of 1.35 reflects its sensitivity to broader market moves. This level of momentum typically signals sustained investor confidence and favorable near-term price action.
LUV's stability score of 31/100 signals elevated volatility and/or leverage concerns. Key stability metrics include a beta of 1.35 and a debt-to-equity ratio of 62.00x (sector avg: 1.3x). Investors should be prepared for wider-than-average price swings and consider position sizing accordingly to manage portfolio risk.
SOUTHWEST AIRLINES CO's short interest score of 38/100 reveals significant bearish positioning, suggesting institutional investors are actively betting against the stock. Specific risk factors include above-average market sensitivity (beta: 1.35), elevated leverage (D/E: 62.00x). At $16.8B (large-cap), LUV carries meaningful risk and is best suited for investors with high risk tolerance who have thoroughly evaluated the bear thesis.
LUV pays a solid dividend yield of 2.3%, contributing an income component to total returns. This compares to a sector average dividend yield of 1.4%. This moderate yield suggests a balance between returning capital to shareholders and retaining earnings for reinvestment — a common profile among quality compounders.
SOUTHWEST AIRLINES CO is a large-cap company in the Transportation, Communications, Electric, Gas, And Sanitary Services sector, ranked #0 of 50 in its sector (100th percentile) and #1482 of 7,333 overall (80th percentile). Key comparisons include ROE of 2.3% trailing the 11.9% sector median and operating margins of 0.2% below the 14.8% sector average. This top-quartile standing reflects exceptional competitive strength relative to Transportation, Communications, Electric, Gas, And Sanitary Services peers.
While LUV currently exhibits a HOLD profile, superior opportunities exist within the TRANSPORTATION, COMMUNICATIONS, ELECTRIC, GAS, AND SANITARY SERVICES sector. Our model identifies several "Strong Buy" candidates with higher quality scores and more attractive valuations among direct industry competitors.
View Top Transportation, Communications, Electric, Gas, And Sanitary Services Alpha →Quant Factor Profile
Key factor gap
Momentum (87) vs Stability (31) — closing this gap could shift the rating.
EV/EBITDA 192% ABOVE SECTOR MEDIAN
ROE 81% BELOW SECTOR MEDIAN
Gross Margin 43% BELOW SECTOR MEDIAN
Above 50MA
37.18%
Net New Highs
+51081
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