Delta vs Southwest Airlines Which Offers More Value?

Delta and Southwest Airlines are two major players in the aviation industry, each with their own competitive strengths and weaknesses. Delta is a legacy carrier known for its extensive domestic and international route network, while Southwest is a low-cost carrier famous for its affordable fares and customer-friendly policies. Investors considering buying stocks in either company must weigh factors such as financial performance, market share, and future growth potential to make an informed decision. Let's dive deeper into the comparison of Delta vs Southwest Airlines stocks.

Delta or Southwest Airlines?

When comparing Delta 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 Delta 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. Delta has a dividend yield of 1.03%, 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. Delta reports a 5-year dividend growth of 4.56% 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 Delta P/E ratio at 20.82 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. Delta P/B ratio is 1.27 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, Delta has seen a 5-year revenue growth of 0.17%, while Southwest Airlines's is 0.14%. Return on Equity (ROE) measures how effectively a company uses equity investment to generate earnings, with Delta's ROE at 6.26% 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 ₹120.10 for Delta and $32.85 for Southwest Airlines. Over the past year, Delta's prices ranged from ₹104.45 to ₹159.80, with a yearly change of 52.99%. 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.