Southwest Airlines operates passenger airlines that provide scheduled air transportation services in the United States, Mexico, Jamaica, The Bahamas, Aruba, and the Dominican Republic. The company was founded in 1967 and is based in Dallas, Texas.
LUV Price Forecast Based on DCF Valuation
DCF Fair Value Target:
We started the process of determining a valid price forecast for Southwest Airlines Co with a discounted cash flow analysis -- the results of which can be found in the table below. To summarize, we found that Southwest Airlines Co ranked in the 66th percentile in terms of potential gain offered. Moreover, under all the scenarios we modelled, the output consistently forecasted positive returns. As for the metrics that stood out in our discounted cash flow analysis of Southwest Airlines Co, consider:
Interest coverage, a measure of earnings relative to interest payments, is 26.06; that's higher than 88.6% of US stocks in the Industrials sector that have positive free cash flow.
LUV's estimated cost of debt, based largely on its market capitalization and its interest coverage ratio, is 2%; for context, that number is higher than 34.5% of tickers in our DCF set.
Terminal Growth Rate in Free Cash Flow
Return Relative to Current Share Price
For other companies in the Industrials that have a similar discounted cashflow valuation profile (and ensuing price forecasts) as LUV, try JBHT, AYI, RLGT, MIDD, and KSU.