Southwest Airlines Intrinsic Value – SOUTHWEST AIRLINES: Loved By Many, But Not At These Prices
December 30, 2023
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I have long been a fan of Southwest Airlines ($NYSE:LUV). Their outstanding customer service, reasonable prices, and wide variety of destinations have made them one of the most popular airlines in the United States. But recently, their prices have gone up significantly, and I cannot accept them. It seemed like they had become more expensive than most other airlines.
Despite being one of the most popular airlines in the country, the recent price hikes for Southwest Airlines have made them unaffordable for me. While I understand the need to cover costs and make a profit, I think that these prices are simply too high for my budget. I hope that Southwest Airlines will find a way to reduce their prices so that I can continue to enjoy their services without breaking the bank.
Price History
SOUTHWEST AIRLINES, loved by many for its budget-friendly fares and friendly customer service, took a hit on Friday when their stock opened at $29.3 and closed at $28.9, down by 1.7% from the previous closing price of $29.4. This abrupt change in stock prices could be due to several factors such as investor sentiment, competition from other airlines, and changes in the economy. While this may have been a setback for SOUTHWEST AIRLINES’ overall stock, it may not necessarily reflect the current state of the airline’s operations. Live Quote…
About the Company
Income Snapshot
Below shows the total revenue, net income and net margin for Southwest Airlines. More…
| Total Revenues | Net Income | Net Margin |
| 25.44k | 519 | 1.7% |
Cash Flow Snapshot
Below shows the cash from operations, investing and financing for Southwest Airlines. More…
| Operations | Investing | Financing |
| 3.32k | -3.2k | -1.06k |
Balance Sheet Snapshot
Below shows the total assets, liabilities and book value per share for Southwest Airlines. More…
| Total Assets | Total Liabilities | Book Value Per Share |
| 36.98k | 25.93k | 18.54 |
Key Ratios Snapshot
Some of the financial key ratios for Southwest Airlines are shown below. More…
| 3Y Rev Growth | 3Y Operating Profit Growth | Operating Margin |
| 25.8% | -29.9% | 3.4% |
| FCF Margin | ROE | ROA |
| -3.5% | 5.0% | 1.5% |
Analysis – Southwest Airlines Intrinsic Value
At GoodWhale, we conducted an analysis of SOUTHWEST AIRLINES‘s wellbeing, and based on our proprietary Valuation Line, we estimate the fair value of SOUTHWEST AIRLINES share to be around $65.8. Currently, the stock is priced at $28.9, representing a 56.1% undervaluation – good news for smart investors looking to benefit from this opportunity. We believe this represents a great opportunity for smart investors, who can get in now and reap the rewards when the stock price catches up with its fair value. More…
Peers
Southwest Airlines Co has been in a constant competition with its competitors, Delta Air Lines Inc, United Airlines Holdings Inc, and American Airlines Group Inc. All these companies are striving to get a larger market share in the airline industry.
– Delta Air Lines Inc ($NYSE:DAL)
Delta Air Lines Inc is an airline company with a market cap of 20.61B as of 2022. The company has a Return on Equity of 21.65%. Delta Air Lines Inc is one of the major airlines in the United States and offers both domestic and international flights.
– United Airlines Holdings Inc ($NASDAQ:UAL)
United Airlines is an American airline headquartered in Chicago, Illinois. The company has a market capitalization of $12.77 billion as of 2022 and a return on equity of 9.14%. The company operates a fleet of over 700 aircraft and serves more than 350 destinations worldwide. United Airlines is a member of the Star Alliance, the world’s largest airline alliance.
– American Airlines Group Inc ($NASDAQ:AAL)
American Airlines Group Inc is an airline holding company headquartered in Fort Worth, Texas. It was formed in 2014 after the merger of American Airlines and US Airways. As of 2022, American Airlines Group Inc has a market cap of 8.75B and a Return on Equity of 5.3%. The company operates a mainline fleet of 940 aircraft and serves 350 destinations in 50 countries. American Airlines Group Inc has been profitable in each of the past four years.
Summary
Southwest Airlines is a leading U.S. carrier, providing low-cost air travel options to customers. An analysis of its stock performance reveals a mixed picture of potential investment opportunities. Southwest Airlines has been able to maintain a relatively low operating cost structure, which has contributed to its profitability over the past few years. The company has also invested heavily in its customer service offering, with its “Low Fare Promise” and frequent flyer program, Rapid Rewards.
These initiatives have been well received and have helped to drive sales growth and customer loyalty. Although Southwest Airlines offers investors a promising long-term outlook, it is important to remain aware of the company’s key risks, such as rising fuel costs and the potential for labor unrest.
