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Research · S&P 500 · Industrials
LUV · Southwest Airlines
The numbers, the scorecard and what analysts say, with the source for each. Information, not advice.
Value Scorecard · run 2026-10-18
13 value checks: 12 scored 1 to 5 where the data allows, plus moat evidence
23/55
low-moderate value score11 of 12 checks scored11 of the 12 checks that carry a score were scored from the data available. 1 could not be scored (Margin of Safety) and was left out, so the score is out of 55 instead of 60. The label uses the same share of the available points as for a full scorecard. The moat is shown as evidence from the filings, without a score.
Earnings & returns
EPS Trend
2/5Diluted EPS: $0.87 (2022), $0.81 (2023), $0.76 (2024), $0.79 (2025). It ended at or below 2022; the framework scores that as 2.
ROE Trend
1/5ROE (net income / common equity): 5.2% (2022), 4.6% (2023), 4.7% (2024), 5.5% (2025). Median 5.0%, lowest 4.6%; the framework scores a median 5% or less as 1.
ROIC
1/5ROIC of 2.4%: operating income of $428.00M divided by $18.14B of capital (total assets $29.06B minus current liabilities $10.92B), fiscal year to Dec 31, 2025, as filed in the 10-K (SEC EDGAR). The framework scores below 5% as 1.
Profit Margins
2/5Net margin of 2.8%; the framework scores 0-5% as 2; gross margin 22.4%, operating margin 3.4%.
Balance sheet & cash
Debt-to-Equity
3/5Debt-to-equity of 0.97; the framework scores 0.8-1.5 as 3 (total debt $6.89B, total cash $3.79B).
Free Cash Flow
1/5Free cash flow (operating cash flow minus capital expenditure): -$156.00M (2022), -$356.00M (2023), -$1.59B (2024), -$831.00M (2025). The latest figure is at or below zero; the framework scores that as 1.
Retained Earnings
5/5Retained earnings, as filed in the 10-Ks (SEC EDGAR): $16.26B (2022), $16.30B (2023), $16.33B (2024), $16.39B (2025). It rose every year; the framework scores that as 5.
Valuation models
Graham IV
1/5IV = EPS x (8.5 + 2g) x (4.4 / Y) = $1.60 x (8.5 + 2 x 0.0) x (4.4 / 4.5) = $13.30 (EPS CAGR -1.2% floored at 0%; the formula returns a negative value below -4.25% growth). Current price $39.50; price is 197.0% above the model value.
DCF Value
1/5Free cash flow per share is -$1.71; a two-stage DCF cannot be computed from negative free cash flow.
Margin of Safety
Not scoredNeeds both a Graham value and a DCF value. Graham value $13.30 (price is 197.0% above the model value); DCF value N/A (not comparable).
Price-to-Book
3/5P/B of 2.73; the framework scores 1.5-3.0 as 3.
Business quality
Moat Evidence
Not scoredA moat (a brand, a network, switching costs, patents, scale, a licence) is not a number in the filings, so Valerius doesn’t score it. Below are the figures and the words moat analysis starts from, from the company’s own 10-K filings. The conclusion is yours.
Return on capital, each year
Above 15% in 4 of 10 years (2016-2025); lowest -14.1%, highest 21.4%.
Gross margin, each year
Not reported: the filings don’t state a gross profit or cost of revenue figure, as is common for oil and gas companies, banks and insurers.
Competition, in the company’s own words · 10-K filed Feb 5, 2026
Historically, the airline industry has been an extremely volatile industry. Among other things, it has been cyclical, energy intensive, labor intensive, capital intensive, technology intensive, highly regulated, heavily taxed, and extremely competitive. The airline industry has also been particularly susceptible to detrimental events such as U.S. government shutdowns, economic recessions, jet fuel price volatility, unscheduled maintenance disruptions, outbreaks of disease and/or pandemics, supply chain challenges, acts of terrorism or war, geopolitical unrest, severe weather, and natural disasters. In 2025, the U.S. airline industry continued to face challenges such as the historically prolonged government shutdown (which impacted key functions such as TSA and the ATC system and mandated industry capacity reductions), inflationary cost pressures (particularly labor costs), delayed aircraft deliveries, shifting travel demand patterns, economic uncertainty, disruptive weather events, and natural disasters. In response to ever-evolving travel patterns, the Company and several other U.S. airlines implemented route network changes and evaluated capacity. Competition within the airline industry is intense and highly unpredictable, and Southwest has historically competed with other airlines on virtually all of its scheduled routes. In recent years, the majority of domestic airline service has been provided by Southwest and the other largest major U.S.
The opening of the company’s “Industry and Competition” section in its 10-K, quoted word for word, not summarized or edited. It is the company’s own description, not Valerius’s view, and may include the company’s expectations. Open the filing.
Return on capital = operating income / (total assets − current liabilities), the ROIC row’s definition; 15% is the framework’s return threshold. Gross margin = gross profit / revenue. Both from each year’s 10-K via SEC EDGAR. Moat analysis commonly looks at whether returns and margins held up over many years. These figures don’t say whether the company has an advantage, what it is, or whether it will last.
Capital Allocation
3/5Capital allocation, 2022-2025: dividends or buybacks paid in 3 of 4 years (fail); $4.06B paid out against -$2.94B of free cash flow (fail: free cash flow was negative); total debt $9.43B to $5.98B, down 36.6%, 2.7x EBITDA (pass: not up more than 10%); shares outstanding 0.59B to 0.52B, down 13.2% (pass). 2 of 4 tests passed; the framework scores that as 3.
Filings
Company notices to the SEC
Not scoredThree kinds of event the company reported to the SEC in the last 5 years, from its filings on SEC EDGAR.
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These are events the company reported to the SEC. An auditor change or a late filing can have many causes; each date links to the filing, where the company explains it. Valerius does not score these.
How the Graham and DCF values were calculated
Graham Formula:
IV = EPS x (8.5 + 2g) x (4.4 / Y)
EPS = $1.60, g = 0.0%, Y = 4.5
g floored at 0.0% (3-year EPS CAGR was -1.2%; below -4.25% the formula returns a negative value)
IV = $13.30
Current price $39.50 vs Graham value $13.30 — price is 197.0% above the model value.
DCF:
FCF/share -$1.706 — a two-stage DCF cannot be computed from negative free cash flow.Data from yfinance summary figures and financial statements, and from the company’s 10-K filings via SEC EDGAR; computed at a price of $39.50. Every score is calculated from the figures by the framework’s fixed rules, and the explanation beside it is generated from the same figures: Graham value, DCF value, margin of safety, ROIC, profit margins, debt-to-equity, price-to-book, EPS trend, ROE trend, free cash flow, retained earnings and capital allocation. No AI is involved in this scorecard. The moat is shown as evidence, without a score. Read each score with the figures beside it. A check that cannot be scored from the available data is shown as not scored and left out of the composite score. Intrinsic value calculations are model outputs based on stated assumptions, not predictions.
Recent headlines · third-party publishers · not investment advice
In the news
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The 8 newest headlines whose title names the company, shown automatically and never chosen by Valerius. From third-party publishers via Yahoo Finance, linked to the source. Valerius doesn't write or endorse them. Not investment advice.