Is Southwest Airlines Co. overvalued or undervalued?

As of 31 October 2025, the valuation grade for Southwest Airlines Co. moved from fair to expensive, indicating a shift towards overvaluation. The company is currently overvalued, with 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 ratio of 10.73 and United Airlines Holdings, Inc. boasts a very attractive P/E of 8.92, highlighting that Southwest Airlines is trading at a significant premium relative to its peers.
Recent performance metrics further reinforce this valuation perspective, as Southwest Airlines has underperformed against the S&P 500 across multiple time frames, including a year-to-date return of -9.49% compared to the S&P 500's 16.30%. This trend suggests that investors may be reassessing the stock's value in light of its current pricing and market performance.