UNITED vs Southwest Airlines Which Is More Promising?

United Airlines and Southwest Airlines are two of the largest and most well-known airline companies in the United States. Both companies have seen fluctuations in their stock prices over the years, impacted by a variety of factors including fuel prices, competition, and industry regulations. United Airlines, based in Chicago, is a legacy carrier with a global reach, while Southwest Airlines, based in Dallas, is known for its low-cost model and strong domestic presence. Investors interested in the airline industry closely monitor the stock performance of these two companies to gauge the overall health and stability of the sector.

UNITED or Southwest Airlines?

When comparing UNITED 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 UNITED 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. UNITED has a dividend yield of 3.04%, while Southwest Airlines has a dividend yield of 2.12%. Beyond the yield itself, considering the growth and sustainability of these dividends is also crucial. UNITED reports a 5-year dividend growth of 6.43% 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 UNITED P/E ratio at 50.67 and Southwest Airlines's P/E ratio at -414.41. Another crucial valuation metric is the Price-to-Book (P/B) Ratio, which compares stock price with book value per share. UNITED P/B ratio is 1.39 while Southwest Airlines's P/B ratio is 1.95.

Growth Investors:

Growth investors prioritize metrics indicative of a company's expansion potential. Focusing on top-line growth, UNITED has seen a 5-year revenue growth of -0.46%, while Southwest Airlines's is 0.14%. Return on Equity (ROE) measures how effectively a company uses equity investment to generate earnings, with UNITED's ROE at 2.56% 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 ¥785.00 for UNITED and $33.81 for Southwest Airlines. Over the past year, UNITED's prices ranged from ¥670.00 to ¥953.00, with a yearly change of 42.24%. 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.