LUV Stock Analysis: Buy, Sell, or Hold?
LUV - Southwest Airlines Co.
$47.07
2.10 (4.67%)
▲
5d:
+3.72%
30d:
-6.33%
90d:
+21.44%
BUY
HIGH Confidence
Analysis Updated: Jul 31, 2026 12:00 AM ET
Earnings: Oct 21, 2026
Smart Money Accumulation
None View Scanner →
Strength: 7.6/10
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Interactive Price Chart (1 Month)
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Bottom Line:
✅ BUY SIGNAL: LUV appears deeply undervalued. Market expects -4.5% annual earnings decline despite 20% recent earnings growth. Contrarian opportunity at discount to historical valuation.
✅ BUY SIGNAL: LUV appears deeply undervalued. Market expects -4.5% 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
$102.01
Based on 14.5% avg growth
INTRINSIC VALUE TODAY
$63.34
25.7% 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 10.6x Exit PE.
In-depth Analysis How we analyze
Valuation Analysis: LUV is currently trading at $47.07, which is considered slightly low relative to its 30-day fair value range of $46.05 to $50.60. From a valuation perspective, the stock is trading at a discount (Forward PE: 9.2) compared to its historical average (10.6). Remarkably, the market is currently pricing in an annual earnings decline of 4.5% 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 uptrend. Immediate support is located at $44.19, while resistance sits at $49.00. The stock is showing strong short-term momentum, up 4.7% recently.
Market Sentiment: The stock shows a mixed technical setup (40/100), with neutral trendline and momentum signals. Wall Street analysts see significant upside, with an average price target of $51.79 (+13.6%). Combining these factors, the current setup offers a favorable risk/reward ratio for buyers.
Technical Outlook: Technically, LUV is in a strong uptrend. Immediate support is located at $44.19, while resistance sits at $49.00. The stock is showing strong short-term momentum, up 4.7% recently.
Market Sentiment: The stock shows a mixed technical setup (40/100), with neutral trendline and momentum signals. Wall Street analysts see significant upside, with an average price target of $51.79 (+13.6%). Combining these factors, the current setup offers a favorable risk/reward ratio for buyers.
Quick Decision Summary
Current Position
SLIGHTLY LOW
Historical Trading Range
$46.05 -
$50.60
Company Quality Score
51/100
(HOLD)
Volume Confirmation
HIGH
Confidence Score
81.9%
All Signals
- BULLISH: Price oversold vs 30-day range
- NEUTRAL: Mixed technical signals (40/100)
- BULLISH: High volume confirmation
- BULLISH: Strong upward momentum (+4.7%)
- BULLISH: Trading below Wall St target ($51.79)
Trading Range Analysis
30-Day Trading Range
$46.05 -
$50.60
Current vs Trading Range
SLIGHTLY LOW
Support & Resistance Levels
Support Level
$44.19
Resistance Level
$49.00
Current Trend
Strong Uptrend
Technical data as of
Aug 3, 2026
Fundamental Context
Forward P/E (Next Year Est.)
9.23
Wall Street Target
$51.79
(+13.6%)
Revenue Growth (YoY)
16.4%
Earnings Growth (YoY)
20.5%
Profit Margin
2.8%
Valuation Discount vs History
-4.5% cheaper
PE vs Historical
9.2 vs 10.6
CHEAP
Market-Implied Price Targets
If current PE multiple persists
Implied Growth (YoY):
-4.5%
(market-implied from PE analysis)
1-Year Target
$43.55
(-5%)
2-Year Target
$41.59
(-9%)
3-Year Target
$39.72
(-13%)
3-Yr Target (if PE normalizes)
(PE: 9→11)
$45.62
(+0%)
3-Year Scenarios
Using analyst projected EPS growth
Bull:
(PE: 20.8, Growth: 46.4%)
$322.64
(+608%)
Base:
(SPY PE: 9.2, Growth: 46.4%)
$143.07
(+214%)
Bear:
(PE: 7.8, Growth: 46.4%)
$121.61
(+167%)
📈
Valuation based on Current Earnings
RECOVERY PLAY: Stock looks expensive now (29x PE), but valuation improves significantly next year (9x PE) as earnings recover.
Trailing PE: 29.01 | Current EPS (TTM): $1.53
Bull Case
$97.64
(+117%)
Analyst growth 100.0%, PE expands to 31.9
Base Case
$88.76
(+97%)
Market implied 100.0%, PE stable at 29.0
Bear Case
$30.18
(-33%)
Severe decline -20.0%, PE contracts to 24.7
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 9.2 to 10.6
Stabilization Target:
$52.38
(+14.9%)
PE Expansion Potential:
+14.9%
Share & Embed Analysis
Last updated: August 03, 2026 5:51 PM ET
Data refreshes hourly during market hours. Next update: 6:51 PM
Data refreshes hourly during market hours. Next update: 6:51 PM
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| Ticker | Score | Recommendation | Change % |
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Technical Signals Check
Is LUV showing a specific setup today?
Insider Activity (6 Months)
0
Buys
2
Sells
Net
INSIDERS SELLING
Recent Transactions
Lisa M Atherton
SELL
118 shares
2026-04-07
Ro Khanna
SELL
2026-02-06
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