Using the PEG framework with analyst consensus forward EPS growth of 25.0% plus 2.0% dividend yield, Southwest Airlines Co. has a fair value of $96.62 based on NTM EPS (FY2026) of $3.86. The current PEG ratio is 0.18.
PEG < 1 = bargain, 1–1.5 = fair, > 2 = expensive.
Growth above 25% is capped — hypergrowth may not be sustainable long-term.
| EPS Growth RateForward | 55.3% |
| Dividend Yield | +2.0% |
| Adjusted Growth (clamped 8–25%)Clamped | 25.0% |
| Fair P/E | 25.0x |
| NTM EPS (FY2026) | $3.86 |
| Fair Value | $96.62 |
| Period | EPS Est. | Growth | Analysts |
|---|---|---|---|
| FY2025 (actual) | $0.79 | — | — |
| FY2026E | $3.86 | +389.2% | 17 |
| FY2027E | $4.98 | +28.8% | 17 |
| FY2028E | $5.29 | +6.3% | 12 |
| FY2029E | $5.32 | +0.5% | 11 |
| FY2030E | $7.14 | +34.2% | 6 |
5Y Forward EPS CAGR: 55.3%
The PEG Fair Value uses the Price/Earnings-to-Growth framework. A stock is fairly valued when its P/E ratio equals its earnings growth rate (PEG = 1.0). This model adds dividend yield to the growth rate per the original PEGY formula.
Growth rate priority: analyst consensus forward EPS CAGR (when ≥ 3 analysts cover the stock), falling back to historical EPS CAGR. Using EPS rather than net income avoids distortion from share buybacks. The growth rate is clamped between 8% and 25% — below 8% would undervalue stable earners, while above 25% would overvalue unsustainable spikes.
| Year | Net Income | EPS | YoY |
|---|
| FY2021 | $977.0M | $1.61 | — |
| FY2022 | $539.0M | $0.87 | -46.0% |
| FY2023 | $465.0M | $0.76 | -12.6% |
| FY2024 | $465.0M | $0.75 | -1.3% |
| FY2025 | $441.0M | $0.79 | +5.3% |
4Y Historical EPS CAGR: -16.3%