Southwest Airlines Could Triple From Here—Here's How

Core Viewpoint - Southwest Airlines is positioned to potentially triple its stock value, attracting investor interest despite the general stigma surrounding the airline industry [1][2]. Company Overview - Southwest Airlines (LUV) is currently trading at $32.14, with a 52-week range of $23.58 to $36.12 and a dividend yield of 2.24% [2]. - The airline is known for its strong profit margins and effective fuel cost management, giving it a competitive edge [2][4]. Business Model Changes - The company is adjusting its business model by introducing new routes and flight schedules while eliminating its previous policy of two free checked bags, which may create new revenue streams [3][4]. Market Position - Southwest Airlines holds a comparable domestic market share to Delta Air Lines and American Airlines, with a significant number of flights per year [7]. - The airline's ability to hedge fuel costs gives it an advantage over competitors like Delta and United Airlines, which have broader international reach but less flexibility [4][6]. Financial Forecasts - Wall Street analysts forecast earnings per share (EPS) for Southwest Airlines to reach $3.27 by 2027, nearly tripling the 2025 forecast of $1.67 [8]. - The current price-to-earnings (P/E) ratio for Southwest Airlines is 44.1x, which, if maintained, could lead to a stock price of over $144 per share based on the EPS forecast [9][10]. Insider Confidence - Recent stock purchases by two Southwest Airlines directors indicate confidence in the company's future performance ahead of the first quarter financial results [11]. Financial Performance - The latest quarterly results show record operating revenue of $6.9 billion, with operating cash flows increasing to $476 million, a 12% rise from the previous year [12][13].