Stock fact sheet · data as of
Southwest Airlines Co. (LUV): fair value, margin of safety and Wheel Score
Industrials · Airlines, Airports & Air Services · United States · Blend
Is LUV undervalued?
Southwest Airlines Co. (LUV) closed at 40.83 on 16 Oct 2026, 33% above the GLS average fair value of 30.59. 5 of the 7 models that produced a number value the shares below the current price. A gap this wide usually means the market is paying for growth or a story the trailing numbers do not show yet; the models work from filed results, not forecasts, so they are conservative by design.
There is a wide gap between GLS Growth (1.63) and Graham Growth (96.92). When the models are this far apart the "fair value" is really a range, and the margin of safety above should be read with that range in mind.
The nightly engine files LUV under Blend.
Nine valuation models for LUV
Each model turns the latest filed numbers into a value per share; the GLS fair value is the simple average of the ones that produce a positive number. The last two rows are shown for reference and never enter the average. The Quote page lets you switch any model off and add your own margin of safety.
| Model | Value | vs price | What it measures |
|---|---|---|---|
| DCF | - | - | Present value of the projected free cash flows, discounted at the cost of capital; no value tonight |
| Graham Number | 23.38 | -43% | The most a defensive investor pays for the earnings and book value per share |
| Graham Growth | 96.92 | +137% | Graham's growth formula: EPS × (8.5 + 2 × growth), adjusted for bond yields |
| Lynch | 42.36 | +4% | EPS × the earnings growth rate (PEG of 1), growth capped at 25% |
| GLS Growth | 1.63 | -96% | EPS compounded ten years at the blended growth rate, discounted back at 15% a year |
| 10 Cap | 20.43 | -50% | Owner's earnings (operating cash flow less maintenance capex) capitalised at 10% |
| Payback Time | - | - | Eight years of compounded free cash flow: the price at which the business pays for itself; no value tonight |
| DDM | 10.59 | -74% | Dividend discount model: next year's dividend ÷ (10% − 3% growth); needs a dividend |
| EPV | 18.83 | -54% | Earnings power value: current EPS capitalised at 9% with no growth |
| Zombie (liquidation) | -31.55 | -177% | Current assets less all liabilities, per share: the balance-sheet floor. Not in the average |
| Wall St target | 49.61 | +22% | Analysts' average 12-month price target. Not in the average |
Quality and financial health
Southwest Airlines Co. scores 8 of 9 on the Piotroski F-score, the nine yes/no tests of profitability, leverage and efficiency on the latest annual accounts - a strong reading that passes the Sunday Scan's "6 or more" rule with room to spare. A GLS Moat score of 2.0/10 is a weak reading: the ten-year history the score grades (revenue, EPS, book value, margins, cash flow, share count, ROIC) has not been steady, so the Moat part of the Wheel Score contributes little.
Returns on capital are thin or negative - ROIC 3.2%, ROE 5.5%, ROA 1.5% - with debt at 0.75 times equity and negative free cash flow.
The dividend yield is 1.76% at a payout ratio of 44%; for a wheel trader holding assigned shares the dividend adds to the covered-call premium, and the ex-dividend date is worth knowing before a call is sold. Revenue comes mainly from Passenger 92%, Product and Service, Other 8%, Cargo and Freight 1% (quarter Q2 FY2026).
Institutional ownership scores 10/10, insider activity 1/10 and Congressional trading 4/10 on the GLS smart-money scales.
| Piotroski F-score | 8 / 9 | ROIC | 3.2% |
|---|---|---|---|
| GLS Moat | 2.0 / 10 | ROE | 5.5% |
| Debt / equity | 0.75 | ROA | 1.5% |
| Free-cash-flow yield | -3.1% | Payout ratio | 44% |
| Institutions | 10 / 10 | Insiders · Congress | 1 · 4 / 10 |
Wheel Score 61: Fair
A Wheel Score of 61 puts Southwest Airlines Co. in the Fair band - below the 70 the Sunday Scan requires. Value 0/25, Health 18/20, Moat 3/15, Premium 20/20 and Stability 20/20; the weakest part is Value (0/25).
Implied volatility is 45% on the near-the-money contracts 20-60 days out - inside the 35-60% range the Wheel Score pays full marks for: enough premium to be worth selling, not so much that the risk is unpaid. The option chain is deep: 211,664 contracts of open interest across all expiries, which means tight fills at most strikes.
Volume runs at 5.5M shares a day on a market cap of $20.0B, with a beta of 1.16; the Stability part of the Wheel Score gives that 20 of 20.
| Part | Points | From | |
|---|---|---|---|
| Value | 0 / 25 | -33% margin of safety | |
| Health | 18 / 20 | Piotroski 8/9 | |
| Moat | 3 / 15 | moat 2.0/10 | |
| Premium | 20 / 20 | implied volatility 45% | |
| Stability | 20 / 20 | 5.5M shares/day, $20.0B cap, beta 1.16 |
The Wheel Score ranks ~7,400 US stocks for selling cash-secured puts and covered calls; it is updated nightly and is not a recommendation. The walkthrough lesson shows how the score fits into a trade, start to finish.
Upcoming events
Southwest Airlines Co. reports earnings on 21 Oct 2026 (after the close) - inside the 14-day window the Sunday Scan avoids, because a put sold now would carry the report's gap risk.
Earnings, dividend, IPO, split and economic calendars for the whole market, filterable to your watchlists.
Similar stocks in Airlines, Airports & Air Services
The 12 companies below are the closest to Southwest Airlines Co. by market cap within the Airlines, Airports & Air Services industry, each with its own fact sheet; the Compare page puts up to eight of them side by side.
| Stock | Close | Fair value | MoS | Wheel | Mkt cap |
|---|---|---|---|---|---|
| LTM LATAM Airlines Group S.A. | 48.50 | 164.30 | +70% | 86Prime | $14.4B |
| UAL United Airlines Holdings, Inc. | 98.96 | 329.44 | +70% | 90Prime | $32.1B |
| PAC Grupo Aeroportuario del Pacífico, S.A.B. de C.V. | 196.49 | 576.76 | +66% | 39No options | $10.2B |
| AAL American Airlines Group Inc. | 12.28 | 165.90 | +93% | 45Weak | $8.1B |
| DAL Delta Air Lines, Inc. | 78.08 | 171.33 | +54% | 90Prime | $51.4B |
| ASR Grupo Aeroportuario del Sureste, S. A. B. de C. V. | 235.08 | 1,442.79 | +84% | 76Good | $7.1B |
| CPA Copa Holdings, S.A. | 133.91 | 315.20 | +58% | 83Prime | $5.5B |
| JOBY Joby Aviation, Inc. | 4.81 | 0.2622 | -1734% | 40Weak | $4.8B |
| OMAB Grupo Aeroportuario del Centro Norte, S.A.B. de C.V. | 91.33 | 555.31 | +84% | 82Prime | $4.4B |
| ALK Alaska Air Group, Inc. | 36.50 | - | - | 45Weak | $4.1B |
| CAAP Corporacion America Airports S.A. | 24.66 | 65.37 | +62% | 80Prime | $4.0B |
| SKYW SkyWest, Inc. | 92.43 | 257.98 | +64% | 87Prime | $3.6B |
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Start free See the Sunday ScanQuestions about LUV
Is LUV undervalued right now?
No: at 40.83 the stock trades 33% above the GLS average fair value of 30.59 (data as of 16 Oct 2026), well beyond what trailing earnings, cash flow and book value support.
What is the Wheel Score of LUV and what does it mean?
LUV scores 61 out of 100 (Fair). The Wheel Score blends the margin of safety (25 points), Piotroski health (20), the GLS moat (15), the option premium on offer (20) and trading stability (20) into one number that ranks stocks for the wheel strategy - selling cash-secured puts, then covered calls if assigned. 80 and above is Prime, 65-79 Good, 50-64 Fair, under 50 Weak.
What is the GLS fair value for LUV?
30.59 per share as of 16 Oct 2026 - the simple average of the 7 valuation models (out of nine: DCF, Graham Number, Graham Growth, Lynch, GLS Growth, 10 Cap, Payback Time, DDM and EPV) that produced a positive value. The models run every night on the latest filings; the Quote page lets you switch any of them off and add a margin of safety of your own.
When does Southwest Airlines Co. report earnings next?
The next earnings report is due on 21 Oct 2026 (after the close), 5 days from the data date of 16 Oct 2026. The Calendars page lists every upcoming report with its time of day.
Does LUV have listed options, and how liquid are they?
Yes. The nightly snapshot found 696 listed contracts with 211,664 open interest across all expiries and implied volatility of 45% on the near-the-money contracts. The Options scanner lists the cash-secured put and covered call set-ups with premium and annualised yield worked out.