Southwest Airlines vs Frontier

Southwest Airlines and Frontier Airlines are two major players in the airline industry, each with their own unique strengths and weaknesses. Southwest Airlines, known for its low fares, high customer satisfaction, and strong financial performance, has consistently been a top performer in the industry. On the other hand, Frontier Airlines has a focus on ultra-low-cost travel, often offering even lower fares than Southwest. Investors looking to add airline stocks to their portfolio may find both Southwest and Frontier to be attractive options, depending on their investment goals and risk tolerance.

Southwest Airlines or Frontier?

When comparing Southwest Airlines and Frontier, 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 Frontier.

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 2.36%, while Frontier 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 557.14%. On the other hand, Frontier 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 237.19 and Frontier's P/E ratio at -21.02. 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 1.75 while Frontier's P/B ratio is 2.59.

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 Frontier's is 0.62%. Return on Equity (ROE) measures how effectively a company uses equity investment to generate earnings, with Southwest Airlines's ROE at 0.73% and Frontier's ROE at -12.48%.

Retail Investors:

Retail investors often consider stock affordability and company familiarity. For example, day low prices are $30.43 for Southwest Airlines and $5.99 for Frontier. Over the past year, Southwest Airlines's prices ranged from $21.91 to $35.18, with a yearly change of 60.57%. Frontier's prices fluctuated between $2.79 and $8.33, with a yearly change of 198.57%. Brand recognition also plays a role, as familiarity with a company can influence investment decisions.