Southwest Airlines (LUV) Stock: Buy, Sell, or Hold?
LUV - Southwest Airlines Co.
$39.24
0.55 (1.42%)
▲
5d:
+1.32%
30d:
-12.76%
90d:
-11.4%
BUY
HIGH Confidence
Analysis Updated: Sep 11, 2026 12:00 AM ET
Earnings: Oct 28, 2026
Smart Money Accumulation
Options open interest is building while the stock consolidates - a pattern consistent with institutional accumulation. View Scanner →
Signal fired Sep 4, 2026 at $39.62 · last confirmed Sep 9, 2026
Strength: 9.4/10
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Interactive Price Chart (1 Month)
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Bottom Line:
✅ BUY SIGNAL: LUV appears deeply undervalued. Market expects -7.6% annual earnings decline despite 20% recent earnings growth. Contrarian opportunity at discount to historical valuation.
✅ BUY SIGNAL: LUV appears deeply undervalued. Market expects -7.6% annual earnings decline despite 20% recent earnings growth. Contrarian opportunity at discount to historical valuation.
Long-Term Wealth Forecast (2031)
Based on Analyst Consensus Growth & Historical Valuation
0% (Stagnation)
50% (Hyper Growth)
EST. PRICE IN 2031
$96.74
Based on 14.5% avg growth
INTRINSIC VALUE TODAY
$60.07
34.7% 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 10.3x Exit PE.
In-depth Analysis How we analyze
Valuation Analysis: LUV is currently trading at $39.24, which is considered slightly low relative to its 30-day fair value range of $38.70 to $45.48. From a valuation perspective, the stock is trading at a discount (Forward PE: 8.1) compared to its historical average (10.3). Remarkably, the market is currently pricing in an annual earnings decline of 7.6% 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 downtrend. Immediate support is located at $37.58, while resistance sits at $40.56.
Market Sentiment: LUV scores 83/100 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 $50.79 (+29.4%). Combining these factors, the current setup offers a favorable risk/reward ratio for buyers.
Technical Outlook: Technically, LUV is in a downtrend. Immediate support is located at $37.58, while resistance sits at $40.56.
Market Sentiment: LUV scores 83/100 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 $50.79 (+29.4%). Combining these factors, the current setup offers a favorable risk/reward ratio for buyers.
Quick Decision Summary
Current Position
SLIGHTLY LOW
Historical Trading Range
$38.70 -
$45.48
Company Quality Score
62/100
(BUY)
Volume Confirmation
HIGH
Confidence Score
90.5%
All Signals
- BULLISH: Price oversold vs 30-day range
- BULLISH: Strong technical setup (83/100)
- BULLISH: High volume confirmation
- BULLISH: Trading 29.4% below Wall St target ($50.79)
- BULLISH: Bottoming setup score 83/100 — corrected, stabilizing, and turning up
Trading Range Analysis
30-Day Trading Range
$38.70 -
$45.48
Current vs Trading Range
SLIGHTLY LOW
Support & Resistance Levels
Support Level
$37.58
Resistance Level
$40.56
Current Trend
Downtrend
Technical data as of
Sep 11, 2026
Fundamental Context
Forward P/E (Next Year Est.)
8.14
Wall Street Target
$50.79
(+29.4%)
Revenue Growth (YoY)
16.4%
Earnings Growth (YoY)
20.5%
Profit Margin
2.8%
Valuation Discount vs History
-7.6% cheaper
PE vs Historical
8.1 vs 10.3
CHEAP
Market-Implied Price Targets
If current PE multiple persists
Implied Growth (YoY):
-7.6%
(market-implied from PE analysis)
1-Year Target
$36.26
(-8%)
2-Year Target
$33.50
(-15%)
3-Year Target
$30.96
(-21%)
3-Yr Target (if PE normalizes)
(PE: 8→10)
$39.19
(0%)
3-Year Scenarios
Using analyst projected EPS growth
Bull:
(PE: 20.2, Growth: 44.2%)
$291.44
(+643%)
Base:
(SPY PE: 8.1, Growth: 44.2%)
$117.56
(+200%)
Bear:
(PE: 6.9, Growth: 44.2%)
$99.93
(+155%)
📈
Valuation based on Current Earnings
RECOVERY PLAY: Stock looks expensive now (24x PE), but valuation improves significantly next year (8x PE) as earnings recover.
Trailing PE: 24.18 | Current EPS (TTM): $1.60
Bull Case
$85.12
(+117%)
Analyst growth 100.0%, PE expands to 26.6
Base Case
$77.38
(+97%)
Market implied 100.0%, PE stable at 24.2
Bear Case
$26.31
(-33%)
Severe decline -20.0%, PE contracts to 20.6
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 8.1 to 10.3
Stabilization Target:
$49.68
(+26.6%)
PE Expansion Potential:
+26.6%
Share & Embed Analysis
Last updated: September 13, 2026 4:22 PM ET
Data refreshes hourly during market hours. Next update: 5:22 PM
Data refreshes hourly during market hours. Next update: 5:22 PM
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Technical Signals Check
Is LUV showing a specific setup today?
Insider Activity (6 Months)
0
Buys
1
Sells
Net
INSIDERS SELLING
Recent Transactions
Lisa M Atherton
SELL
118 shares
2026-04-07
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