Is Southwest Airlines Co. overvalued or undervalued?

As of 31 October 2025, the valuation grade for Southwest Airlines Co. has moved from fair to expensive. This indicates that the company is currently overvalued. Key valuation ratios include a P/E ratio of 38, a Price to Book Value of 3.10, and an EV to EBITDA of 11.42. In comparison, Delta Air Lines, Inc. has a P/E of 10.73 and an EV to EBITDA of 6.39, while United Airlines Holdings, Inc. shows a very attractive P/E of 8.92 and an EV to EBITDA of 5.60, highlighting that Southwest Airlines is trading at a premium relative to its peers.
Additionally, the stock has underperformed against the S&P 500, with a year-to-date return of -9.88% compared to the S&P 500's 16.30%. This performance further supports the conclusion that Southwest Airlines Co. is overvalued in the current market environment.