Frontier vs Southwest Airlines Which Is More Attractive?

Frontier Airlines and Southwest Airlines are two major players in the competitive world of airline stocks. Frontier Airlines, known for its low-cost approach and focus on budget travelers, has rapidly grown in recent years but faces stiff competition from other low-cost carriers. Southwest Airlines, on the other hand, has a long-standing reputation for excellent customer service and reliability. Both stocks offer investors unique opportunities in the airline industry, but their differing strategies and market positions make for an intriguing comparison.

Frontier or Southwest Airlines?

When comparing Frontier 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 Frontier 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. Frontier has a dividend yield of -%, while Southwest Airlines has a dividend yield of 2.17%. Beyond the yield itself, considering the growth and sustainability of these dividends is also crucial. Frontier 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 Frontier P/E ratio at -242.44 and Southwest Airlines's P/E ratio at -406.22. Another crucial valuation metric is the Price-to-Book (P/B) Ratio, which compares stock price with book value per share. Frontier P/B ratio is 2.65 while Southwest Airlines's P/B ratio is 1.91.

Growth Investors:

Growth investors prioritize metrics indicative of a company's expansion potential. Focusing on top-line growth, Frontier has seen a 5-year revenue growth of 0.62%, while Southwest Airlines's is 0.14%. Return on Equity (ROE) measures how effectively a company uses equity investment to generate earnings, with Frontier's ROE at -1.17% 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 $6.48 for Frontier and $33.23 for Southwest Airlines. Over the past year, Frontier's prices ranged from $2.79 to $8.33, with a yearly change of 198.57%. 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.