Southwest Airlines: DCF FV=$14 vs $40.19, P(above)=3.9%. PE=51 for an airline. Airline cost structure is pressured (labor contracts, fuel), capacity discipline lacking industry-wide. Activist pressure (Elliott) introduced but unclear catalyst. Model and fundamentals both say overvalued. Downgrading 5→4.
Fair Value Distribution — percentile bands
64.9% of simulations place fair value above current price
WHAT IS PRICED IN
Revenue-Based Reverse DCF
0.8%/yr
±9.4% · revenue growth to justify current price
FCF-Based Reverse DCF
-5.8%/yr
±2.3% · FCF growth to justify current price
THE GAP
Market pricing margin expansion or capex normalization
KEY VALUE DRIVERS
Spearman correlation — what moves this valuation most
Eagle will generate this view by the next trading session (~7h).
Eagle will generate this view by the next trading session (~7h).
Southwest Airlines filed amended 2025 10-K (exhibit correction only). Faces 2026 operating headwinds: labor cost inflation, capacity discipline across industry, consumer health uncertainty. Domestic l...