MeritValue

SOUTHWEST AIRLINES CO

LUVdata completeness 100%19 fiscal years on file
The thesis, from the filings

SOUTHWEST AIRLINES CO earns about 5% on invested capital, and has bought back 8% of its shares over 5 years. The applicable estimate puts fair value near $8.64 a share.Whether it’s worth owning at today’s price is the last question — and yours to answer, below.

i. The business — what you’d actually own
FigureFY 2021FY 2022FY 2023FY 2024FY 2025
Revenue$15.8B1$23.8B2$26.1B3$27.5B3$28.1B3
Net income$977M4$539M5$465M6$465M6$441M6
Operating cash flow$2.32B7$3.79B8$3.16B9$462M9$1.84B9
Capital expenditure$505M10$3.92B11$3.52B12$2.05B12$2.67B12
Free cash flow (derived)$1.82B7−$134M8−$356M9−$1.59B9−$831M9
Total debt—$8.1B13$8.01B14$6.7B15$4.93B16
Cash & equivalents$12.5B17$9.49B18$9.29B19$7.51B20$3.23B20
Diluted shares609.0M642.0M640.0M643.0M558.0M

Superscripts are receipts. Each links to the SEC filing the number came from (full list at the bottom).

ii. Your slice — ownership made literal
If you owned
shares
Net assets behind them
$143.03
your share of equity
Profit it earned you last year
$7.9
Free cash flow it threw off
−$14.89
Debt you’d be carrying
$88.33

10 shares is a claim on $143.03 of net worth that earned you $7.9 and generated −$14.89 of cash last year, against $88.33 of debt.

iii. Is this a good business?
Moat signal · return on invested capital
5% avg · 5y
FY21 —FY22 6%FY23 5%FY24 5%FY25 5%

It earned an average 5% on invested capital over 5 years. Compare that to what it costs to fund the business.

seeing a moat in the numbers →
Management signal · capital allocation
−8% shares · 5y

Share count is down 8% over 5 years — management has been buying back stock, quietly handing owners a bigger slice. Total debt has fallen 39% — deleveraging.

reading capital allocation →

Signals, not verdicts — read from the filings above. Numbers don’t prove a moat; they show its footprint. You decide.

iv. What it’s worth — engine v0.1.0
DCF · Growth Exit 10Y
not applicable
3y-median FCF non-positive — growth-exit DCF not applicable (see EPV)
DCF · Growth Exit 5Y
not applicable
3y-median FCF non-positive — growth-exit DCF not applicable (see EPV)
Earnings Power Value
$8.64
assumptions (8)
  • riskFreeRate4.7%
  • equityRiskPremium5.0%
  • beta100.0%
  • equityWeight85.0%
  • costOfDebtSpread1.5%
  • taxRate21.0%
  • normalizedEarnings$465M
  • growthAssumed0.0%
Graham Number
$15.94
assumptions (1)
  • grahamMultiplier2250.0%

Different models answer different questions — which to trust when →

Sources — the receipts
  1. 10-K · period ending 2021-12-31 · accession 0000092380-24-000027 (RevenueFromContractWithCustomerExcludingAssessedTax)
  2. 10-K · period ending 2022-12-31 · accession 0000092380-25-000024 (RevenueFromContractWithCustomerExcludingAssessedTax)
  3. 10-K · period ending 2023-12-31 · accession 0000092380-26-000004 (RevenueFromContractWithCustomerExcludingAssessedTax)
  4. 10-K · period ending 2021-12-31 · accession 0000092380-24-000027 (NetIncomeLoss)
  5. 10-K · period ending 2022-12-31 · accession 0000092380-25-000024 (NetIncomeLoss)
  6. 10-K · period ending 2023-12-31 · accession 0000092380-26-000004 (NetIncomeLoss)
  7. 10-K · period ending 2021-12-31 · accession 0000092380-24-000027 (NetCashProvidedByUsedInOperatingActivities)
  8. 10-K · period ending 2022-12-31 · accession 0000092380-25-000024 (NetCashProvidedByUsedInOperatingActivities)
  9. 10-K · period ending 2023-12-31 · accession 0000092380-26-000004 (NetCashProvidedByUsedInOperatingActivities)
  10. 10-K · period ending 2021-12-31 · accession 0000092380-24-000027 (PaymentsToAcquireProductiveAssets)
  11. 10-K · period ending 2022-12-31 · accession 0000092380-25-000024 (PaymentsToAcquireProductiveAssets)
  12. 10-K · period ending 2023-12-31 · accession 0000092380-26-000004 (PaymentsToAcquireProductiveAssets)
  13. 10-K · period ending 2022-12-31 · accession 0000092380-23-000010 (LongTermDebt)
  14. 10-K · period ending 2023-12-31 · accession 0000092380-24-000027 (LongTermDebt)
  15. 10-K · period ending 2024-12-31 · accession 0000092380-25-000024 (LongTermDebt)
  16. 10-K · period ending 2025-12-31 · accession 0000092380-26-000004 (LongTermDebt)
  17. 10-K · period ending 2021-12-31 · accession 0000092380-23-000010 (CashAndCashEquivalentsAtCarryingValue)
  18. 10-K · period ending 2022-12-31 · accession 0000092380-24-000027 (CashAndCashEquivalentsAtCarryingValue)
  19. 10-K · period ending 2023-12-31 · accession 0000092380-25-000024 (CashAndCashEquivalentsAtCarryingValue)
  20. 10-K · period ending 2024-12-31 · accession 0000092380-26-000004 (CashAndCashEquivalentsAtCarryingValue)