Southwest Airlines - Comparative Multiple Analysis

Southwest Airlines (Comparative Multiple Analysis)

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Notes on the Comparative Multiple Analysis of Southwest Airlines

WikiWealth compares Southwest Airlines's revenue, EBITDA, and EBIT multiples to their peers in order to determine the appropriate fair valuation. Click in the top right corner to experiment with Southwest Airlines's comparative analysis.

Notes from the analysis:

1. WikiWealth uses quantitative measures to determine the multiple range for Southwest Airlines.
2. Free cash flow to the firm (FCF) multiple is free cash flow to equity holders plus interest owed to Southwest Airlines's debt holders.
3. Multiples incorporate benefits due to economies of scale; WikiWealth compares absolute enterprise value multiples to competitor's multiples.
4. WikiWealth excludes outliers when calculating individual company multiples.

Helpful Information for Southwest Airlines's Analysis


How does this work? The Comparative Investment Analysis determines the value of Southwest Airlines by comparing Southwest Airlines financial ratios, prices, growth rates, margins, etc. to those of relevant peer groups.

Value Investing Importance? This method is widely used by investment professionals to determine the correct price of investments, especially initial public offerings (IPOs). It is one element of WikiWealth's three Wall Street approaches used to determine the correct fair value of Southwest Airlines.

See the Southwest Airlines cash flow (DCF) analysis for a completely different approach that's popular on Wall Street for determining the value of an investment in Southwest Airlines.

Also, see the Southwest Airlines's buffett intrinsic valuation analysis for WikiWealth's attempt to replicate the investing formula's used by Warren Buffett and Southwest Airlines's valuation conclusion for a quick summary.