Southwest Airlines vs American Airlines Which Outperforms?

Southwest Airlines and American Airlines are two major players in the airline industry, both offering domestic and international flight services. Their stocks are closely monitored by investors and analysts alike, as they are indicators of the overall health of the industry. Southwest Airlines is known for its low-cost, no-frills approach, while American Airlines boasts a larger fleet and more extensive route network. Both companies have faced challenges in recent years, including competition from low-cost carriers and fluctuating fuel prices. Investors must carefully consider these factors when deciding whether to invest in Southwest Airlines or American Airlines stocks.

Southwest Airlines or American Airlines?

When comparing Southwest Airlines and American 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 Southwest Airlines and American 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. Southwest Airlines has a dividend yield of 2.76%, while American Airlines has a dividend yield of -%. Beyond the yield itself, considering the growth and sustainability of these dividends is also crucial. Southwest Airlines reports a 5-year dividend growth of 0.00% year and a payout ratio of -897.92%. On the other hand, American Airlines reports a 5-year dividend growth of 0.00% year and a payout ratio of 0.00%.

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 Southwest Airlines P/E ratio at -406.76 and American Airlines's P/E ratio at 33.85. Another crucial valuation metric is the Price-to-Book (P/B) Ratio, which compares stock price with book value per share. Southwest Airlines P/B ratio is 1.88 while American Airlines's P/B ratio is -1.92.

Growth Investors:

Growth investors prioritize metrics indicative of a company's expansion potential. Focusing on top-line growth, Southwest Airlines has seen a 5-year revenue growth of 0.14%, while American Airlines's is -0.16%. Return on Equity (ROE) measures how effectively a company uses equity investment to generate earnings, with Southwest Airlines's ROE at -0.46% and American Airlines's ROE at -5.42%.

Retail Investors:

Retail investors often consider stock affordability and company familiarity. For example, day low prices are $31.73 for Southwest Airlines and $13.89 for American Airlines. Over the past year, Southwest Airlines's prices ranged from $22.58 to $35.18, with a yearly change of 55.80%. American Airlines's prices fluctuated between $9.07 and $16.15, with a yearly change of 78.06%. Brand recognition also plays a role, as familiarity with a company can influence investment decisions.