LUVSouthwest Airlines
Is the business good?
The checks split: earnings fully cash-backed (3.1×) and margins widening, but returns that lean on debt.
Operating profit is fully backed by cash. Conversion is worsening vs a year ago.
Positive operating leverage, operating profit is growing faster than sales, so margins widen as the business scales.
Leverage-amplified, a high assets-to-equity ratio does much of the work. ROE 9% = margin × turnover × leverage.
Unless marked, from derived.
Against the whole market›
Percentile against every name Ryufin tracks. Higher is better; the tick marks the middle of the market. Context, not one of the checks above.
Where this answer is blind. The F-score rewards improvement, so an already-elite company can score mid-pack.
How good a business is LUV?
Southwest Airlines earns 8.9% on the capital it employs against a 9.0% cost of capital, so growth costs more than it returns.
Return on invested capital · cost of capital 9.0% · 0.10 points below what the capital costs: growth destroys value
- Operating margin
- 3.5%
Operating margin · Airlines median 7.9% · 12 months to Q2 2026
- Cash conversion
- 3.10×
Cash conversion · 7.51× a year ago · operating cash flow covers the operating profit after tax
- Share count, year on year
- −8.9%
Share count, year on year · bought back, each share owns more of the company
| Year | Operating margin |
|---|---|
| FY2020 | −42% |
| FY2021 | 11% |
| FY2022 | 4.3% |
| FY2023 | 0.86% |
| FY2024 | 1.2% |
| FY2025 | 1.5% |
Details›
- Operating margin12 months to Q2 2026
- 3.5%
- Net margin12 months to Q2 2026
- 2.8%
- Free cash flow margin
- −1.5%
- Revenue, trailing twelve months
- $30.1B
- Free cash flow, trailing twelve months
- −$455M
- Net income, trailing twelve months
- $837M
- Return on invested capitaloperating profit after tax ÷ debt + equity − cash
- 8.9%
Margins, capital and share counts from the statements as filed with the SEC; cash conversion is operating cash flow over operating profit after tax.
Airlines
The closest names by size in the same industry