Southwest Airlines (LUV) Stock: Buy, Sell, or Hold?
LUV - Southwest Airlines Co.
$41.75
-0.28 (-0.67%)
▼
5d:
+5.7%
30d:
+0.48%
90d:
-8.0%
BUY
HIGH Confidence
Analysis Updated: Oct 23, 2026 12:00 AM ET
Earnings: Oct 21, 2026
0d
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Interactive Price Chart (1 Month)
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Bottom Line:
✅ BUY SIGNAL: LUV shows strong fundamentals and good volume confirmation. Solid entry point despite slightly high pricing.
✅ BUY SIGNAL: LUV shows strong fundamentals and good volume confirmation. Solid entry point despite slightly high pricing.
LUV is flagged by 1 backtest-validated scanner today
SPY Bullish (stocks from this scanner have beaten SPY by a median 0.37% over the next 20 trading days; LUV has been on it 2 days). Backtested on 8 months of scanner history vs the S&P 500, as of 2026-10-23.
See all of today's Best Signals in the free scanner →Long-Term Wealth Forecast (2031)
Based on Analyst Consensus Growth & Historical Valuation
0% (Stagnation)
50% (Hyper Growth)
EST. PRICE IN 2031
$84.26
Based on 14.5% avg growth
INTRINSIC VALUE TODAY
$52.32
20.2% Margin of Safety
How this is calculated: We use a Growth Decay Model: starting with analyst consensus growth (adjusted above) and gradually slowing it down to a long-term terminal rate (4%) by Year 5. This provides a more realistic valuation than assuming constant hyper-growth. We then apply a 10.1x Exit PE.
In-depth Analysis How we analyze
Valuation Analysis: LUV is currently trading at $41.75, which is considered slightly high relative to its 30-day fair value range of $39.90 to $42.17. The stock's valuation (Forward PE: 9.8) is in line with its historical norms (10.1). Remarkably, the market is currently pricing in an annual earnings decline of 1.2% over the next few years. This pessimistic expectation contrasts with the company's recent 20.5% earnings growth, suggesting potential undervaluation if the company simply maintains stability.
Technical Outlook: Technically, LUV is in a strong downtrend. The price is approaching resistance at $42.08. A breakout above this level would be a bullish signal, while rejection here could lead to consolidation.
Market Sentiment: LUV scores 76/100 on our bottoming-setup gauge — the chart has corrected and is stabilizing (RSI reset, momentum turning up), historically a favorable entry zone. Wall Street analysts see significant upside, with an average price target of $49.18 (+17.8%). Combining these factors, the current setup offers a favorable risk/reward ratio for buyers.
Technical Outlook: Technically, LUV is in a strong downtrend. The price is approaching resistance at $42.08. A breakout above this level would be a bullish signal, while rejection here could lead to consolidation.
Market Sentiment: LUV scores 76/100 on our bottoming-setup gauge — the chart has corrected and is stabilizing (RSI reset, momentum turning up), historically a favorable entry zone. Wall Street analysts see significant upside, with an average price target of $49.18 (+17.8%). Combining these factors, the current setup offers a favorable risk/reward ratio for buyers.
Quick Decision Summary
Current Position
SLIGHTLY HIGH
Historical Trading Range
$39.90 -
$42.17
Company Quality Score
66/100
(BUY)
Volume Confirmation
HIGH
Confidence Score
73.8%
All Signals
- BULLISH: Strong technical setup (76/100)
- BULLISH: High volume confirmation
- BULLISH: Trading below Wall St target ($49.18)
- BULLISH: Bottoming setup score 76/100 — corrected, stabilizing, and turning up
Trading Range Analysis
30-Day Trading Range
$39.90 -
$42.17
Current vs Trading Range
SLIGHTLY HIGH
Support & Resistance Levels
Support Level
$38.50
Resistance Level
$42.08
Current Trend
Strong Downtrend
Technical data as of
Oct 23, 2026
Fundamental Context
Forward P/E (Next Year Est.)
9.75
Wall Street Target
$49.18
(+17.8%)
Revenue Growth (YoY)
16.4%
Earnings Growth (YoY)
20.5%
Profit Margin
2.8%
Valuation Discount vs History
-1.2% cheaper
PE vs Historical
9.8 vs 10.1
FAIR
Market-Implied Price Targets
If current PE multiple persists
Implied Growth (YoY):
-1.2%
(market-implied from PE analysis)
1-Year Target
$41.25
(-1%)
2-Year Target
$40.75
(-2%)
3-Year Target
$40.26
(-4%)
3-Yr Target (if PE normalizes)
(PE: 10→10)
$41.73
(0%)
3-Year Scenarios
Using analyst projected EPS growth
Bull:
(PE: 19.9, Growth: 58.2%)
$287.14
(+588%)
Base:
(SPY PE: 9.7, Growth: 58.2%)
$140.91
(+238%)
Bear:
(PE: 8.3, Growth: 58.2%)
$119.77
(+187%)
📈
Valuation based on Current Earnings
RECOVERY PLAY: Stock looks expensive now (21x PE), but valuation improves significantly next year (10x PE) as earnings recover.
Trailing PE: 20.50 | Current EPS (TTM): $2.05
Bull Case
$92.47
(+122%)
Analyst growth 100.0%, PE expands to 22.6
Base Case
$84.06
(+101%)
Market implied 100.0%, PE stable at 20.5
Bear Case
$28.58
(-32%)
Severe decline -20.0%, PE contracts to 17.4
These are projections based on PE multiples and EPS growth scenarios, not predictions. Actual results may vary significantly.
💡
Upside Surprise Potential
If earnings stabilize (0% growth), PE could expand from 9.7 to 10.1
Stabilization Target:
$43.27
(+3.6%)
PE Expansion Potential:
+3.6%
Share & Embed Analysis
Last updated: October 24, 2026 7:50 AM ET
Data refreshes hourly during market hours. Next update: 8:50 AM
Data refreshes hourly during market hours. Next update: 8:50 AM
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Technical Signals Check
Is LUV showing a specific setup today?
Insider Activity (6 Months)
0
Buys
0
Sells
0
Net
NEUTRAL
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