American Airlines vs Southwest Airlines Which Is More Favorable?

American Airlines and Southwest Airlines are two of the largest airline companies in the United States. Both companies have a long-standing history in the industry and have garnered a loyal customer base over the years. However, their stock performances have been quite different, with American Airlines facing more volatility and Southwest Airlines showing more stability. Investors have been closely monitoring the performance of both stocks to determine which one presents a better investment opportunity in the continuously evolving airline industry.

American Airlines or Southwest Airlines?

When comparing American Airlines and Southwest Airlines, different investors may prioritize various metrics based on their investment strategies and goals. So, ask yourself what type of investor you are. This will guide you in determining which metrics are most important for your investment decision between American Airlines and Southwest Airlines.

Dividend Investors:

Dividend investors look for stable and growing income streams, using dividend metrics to assess potential investments. A company's dividend yield essentially measures the size of its dividend relative to the total market value of the company. American Airlines has a dividend yield of -%, while Southwest Airlines has a dividend yield of 2.18%. Beyond the yield itself, considering the growth and sustainability of these dividends is also crucial. American Airlines reports a 5-year dividend growth of 0.00% year and a payout ratio of 0.00%. On the other hand, Southwest Airlines reports a 5-year dividend growth of 0.00% year and a payout ratio of -879.59%.

Value Investors:

Value investors focus on financial metrics to determine a stock's intrinsic value compared to its market value. The Price-to-Earnings (P/E) Ratio links stock price to a company's earnings per share, with American Airlines P/E ratio at 40.45 and Southwest Airlines's P/E ratio at -403.65. Another crucial valuation metric is the Price-to-Book (P/B) Ratio, which compares stock price with book value per share. American Airlines P/B ratio is -2.29 while Southwest Airlines's P/B ratio is 1.90.

Growth Investors:

Growth investors prioritize metrics indicative of a company's expansion potential. Focusing on top-line growth, American Airlines has seen a 5-year revenue growth of -0.16%, while Southwest Airlines's is 0.14%. Return on Equity (ROE) measures how effectively a company uses equity investment to generate earnings, with American Airlines's ROE at -5.42% and Southwest Airlines's ROE at -0.47%.

Retail Investors:

Retail investors often consider stock affordability and company familiarity. For example, day low prices are $16.81 for American Airlines and $32.85 for Southwest Airlines. Over the past year, American Airlines's prices ranged from $9.07 to $18.20, with a yearly change of 100.66%. Southwest Airlines's prices fluctuated between $23.58 and $36.12, with a yearly change of 53.18%. Brand recognition also plays a role, as familiarity with a company can influence investment decisions.