Southwest Airlines Trades at 9X While EPS Forecasts Rise 6% and 4%
Southwest Airlines trades at 9X forward earnings and has seen FY26 and FY27 EPS estimates rise 6% to $4.38 and 4% to $5.17 in the last 30 days. Year-ago EPS revisions for those years have jumped 57% and 33%, underscoring oversold conditions.
1. Discounted Valuation
Southwest Airlines currently trades at 9X forward earnings, below 10X peers, marking a steep discount following a sector-wide correction.
2. Upward EPS Revisions
Analysts have raised Southwest’s FY26 EPS forecast by 6% to $4.38 and FY27 by 4% to $5.17 over the past 30 days, with year-ago revisions up 57% and 33% respectively.
3. Cost Headwinds
Jet fuel costs have spiked over 70% in Asia and 140% in Europe, while geopolitical flight disruptions and uneven travel demand have pressured margins, though Southwest’s domestic focus limits exposure.
4. Investor Implications
The combination of discounted valuation and upward EPS revisions highlights a potential buy-the-dip opportunity for patient investors seeking cyclical recovery gains.