Southwest Airlines CoSTU:SWN +4.13%83 Gross Margin % is 18.86% as of Mar. 2026, which is 18% below its 10-year median of 23.01. GuruFocus rates STU:SWN with a GF Score™ of 83/100 and a GF Value™ of €36.52 (Modestly Overvalued). The stock has 6 warning signs investors should review. Among 985 Transportation companies, Southwest Airlines Co ranks worse than 54.42% on this metric.
STU:SWN's Gross Margin % is ranked worse than 54.42% of 985
companies
in the Transportation industry
Industry Median: 20.42
vs STU:SWN: 18.68
Southwest Airlines Co had a gross margin of 18.86% for the quarter that ended in Mar. 2026 => No sustainable competitive advantage
The 5-Year average Growth Rate of Gross Margin for Southwest Airlines Co was 0.00% per year.
Southwest Airlines Co (STU:SWN) Gross Margin % Explanation
Warren Buffett believes that firms with excellent long term economics tend to have consistently higher margins.
Durable competitive advantage creates a high Gross Margin % because of the freedom to price in excess of cost. Companies can be categorized by their Gross Margin %
1. Greater than 40% = Durable competitive advantage
2. Less than 40% = Competition eroding margins
3. Less than 20% = no sustainable competitive advantage
Consistency of Gross Margin is key
Southwest Airlines Co had a gross margin of 18.86% for the quarter that ended in Mar. 2026 => No sustainable competitive advantage
Be Aware
If a company loses its competitive advantages, usually its gross margin declines well before its sales declines. Watching Gross Margin % and Operating Margin % closely helps avoid value trap situations.
Southwest Airlines Co Gross Margin % Related Terms
Southwest Airlines Co Gross Margin % Historical Data
* Premium members only.
The historical data trend for Southwest Airlines Co's Gross Margin % can be seen below:
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
STU:SWN vs AAL, CPA, ALK: Gross Margin % Comparison
For the Airlines subindustry, Southwest Airlines Co's Gross Margin %, along with its competitors' market caps and Gross Margin % data, can be viewed below:
* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.
Southwest Airlines Co Gross Margin % vs Transportation Industry
For the Transportation industry and Industrials sector, Southwest Airlines Co's Gross Margin % distribution charts can be found below:
* The bar in red indicates where Southwest Airlines Co's Gross Margin % falls into.
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
A positive Gross Profit is only the first step for a company to make a net profit. The gross profit needs to be big enough to also cover related labor, equipment, rental, marketing/advertising, research and development and a lot of other costs in selling the products.
Southwest Airlines Co (STU:SWN) has a Gross Margin % of 18.86% as of Mar. 2026. Gross margin is the ratio of total gross profit to net sales. View historical data on Southwest Airlines Co and its competitors. This is 18% below median its historical median of 23.01. According to the industry distribution chart, Southwest Airlines Co ranks #536 out of 985 companies in the Transportation industry, placing it in the top 54.4%.
Is Southwest Airlines Co's Gross Margin % too high?
Southwest Airlines Co's current Gross Margin % of 18.86% is 18% below median its 10-year median of 23.01. The Transportation industry median Gross Margin % is 20.42. Southwest Airlines Co's value of 18.86% is 7.6% below this industry median. Based on the distribution chart, Southwest Airlines Co ranks #536 out of 985 companies in the Transportation industry, which is below the industry midpoint. Overall, Southwest Airlines Co has a GF Score™ of 83/100 and is considered Modestly Overvalued, reflecting its overall financial health beyond just this single metric.
How does Southwest Airlines Co's Gross Margin % compare to AAL and CPA?
According to the Transportation industry distribution chart, Southwest Airlines Co ranks #536 out of 985 companies for Gross Margin %. This places Southwest Airlines Co in the lower half of its industry. The industry median Gross Margin % is 20.42. Southwest Airlines Co's value of 18.86% is 7.6% below this benchmark. While the company's 10-year median is 23.01 vs. the industry median of 20.42, Southwest Airlines Co has consistently been below the industry average. See the competitive comparison table and distribution chart on this page for a detailed peer-by-peer breakdown.
What is a good Gross Margin % for a Transportation company?
The median Gross Margin % among Transportation companies is 20.42, based on 985 companies in the industry. Companies in the top quartile (top 25%) have a Gross Margin % significantly above this median, while those in the bottom quartile fall well below. However, Gross Margin % should not be evaluated in isolation — investors should consider it alongside profitability, growth, and financial strength metrics. Southwest Airlines Co's current Gross Margin % of 18.86% is 7.6% below the industry median. Use the industry distribution chart on this page to see where any company falls relative to its peers.
What does a high Gross Margin % mean?
A high Gross Margin % can signal that a stock is expensive relative to its fundamentals. Gross margin is the ratio of total gross profit to net sales. View historical data on Southwest Airlines Co and its competitors. For the Transportation industry, the median Gross Margin % is 20.42 — values significantly above this may indicate overvaluation, while values below may suggest a bargain or underlying issues. Southwest Airlines Co's current Gross Margin % is 18.86%, which is 18% below median its own 10-year median of 23.01. However, context matters — high-growth companies often justify higher valuations. Always evaluate alongside other metrics like GF Score™ and GF Value™.
Is Southwest Airlines Co stock overvalued right now?
Based on GuruFocus' analysis, Southwest Airlines Co (STU:SWN) is currently considered Modestly Overvalued. The stock's GF Value™ is €36.52, compared to a current price of €45.12 — trading 23.5% above its estimated fair value. The current Gross Margin % is 18.86%, which is 18% below median its 10-year median of 23.01 and 7.6% below the Transportation industry median of 20.42. Southwest Airlines Co's overall GF Score™ is 83/100 with 6 warning signs to review. Investors should evaluate multiple metrics — including profitability, growth, and financial strength — before making a decision.
How is Gross Margin % calculated?
Gross Margin % is calculated from a company's financial statements. For Southwest Airlines Co (STU:SWN), the current Gross Margin % is 18.86% as of Mar. 2026. GuruFocus calculates this using data sourced from SEC filings and annual reports. See the calculation section and 30-year financial data on this page for the full breakdown.
Is Southwest Airlines Co (STU:SWN) Overvalued in 2026?
Based on GuruFocus' analysis, Southwest Airlines Co stock appears to be overvalued.
The current stock price of €45.12 is trading 23.5% above its estimated GF Value™ of €36.52.
GuruFocus considers Southwest Airlines Co to be Modestly Overvalued.
Key valuation signals for STU:SWN:
Gross Margin %: 18.86% (18% below median its 10-year median of 23.01)
GF Value™: €36.52 vs. price of €45.12 (23.5% above fair value)
Industry Position: 7.6% below the Transportation median (#536 of 985)
No single metric tells the full story. See the STU:SWN stock analysis page for a complete view including 30-year financials, guru trades, and insider activity.
Southwest Airlines is the largest domestic air carrier in the United States by passengers boarded. Southwest operates nearly 800 aircraft in an all-Boeing 737 fleet. Despite offering some longer routes and a few perks for business travelers, the airline predominantly specializes in short-haul, leisure flights operated with a simple cabin configuration in a point-to-point network. In early 2026, Southwest modified its cabins to offer some rows with extra legroom, its ticketing process and merchandising to offer assigned seats, and more fare categories to include a basic economy class that appears for the first time in travel aggregators' search results and more directly competes with other airlines' offerings.
83GF Score
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Gross Margin % is just one metric. See GF Value™, 30-year financials, guru trades, warning signs, and more.
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