Southwest Airlines CoSTU:SWN +4.13%83 Operating Margin % is 4.55% as of Mar. 2026, which is 40% below its 10-year median of 7.59. 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 1,007 Transportation companies, Southwest Airlines Co ranks worse than 69.61% on this metric.
Southwest Airlines Co (STU:SWN) Operating Margin % Explanation
Just like Gross Margin %, it is important to see a company maintains its operating margin over time. Among the same industry, a company with higher operating margin is more efficient in its operation. It is also more stable during industry slowdown or recessions. Peter Lynch prefers those with higher margins than those with lower margins.
Be Aware
Operating Margin % can be manipulated by adjusting the rate of depreciation, depletion and amortization (DDA).
If a company is facing competition, its Operating Margin % may decline. Often the Operating Margin % declines well before the company's Revenue or even profit decline. Therefore, Operating Margin % is a very important indicator of whether the company is facing problems.
For instance, by 2012, Nokia (NOK)'s problems were well known and its stock had lost more than 90% of its market value since 2007. But Nokias Operating Margin % had already been in decline since 2002, although its Earnings per Share (Diluted) were still rising. Investors who paid attention to Operating Margin % would have avoided this huge loss. The same can be said for Research-in-Motion (RIMM).
Therefore, Operating Margin % is a very important screening filter for GuruFocus. GuruFocus's Buffett-Munger screener requires that the profit margin is either consistent or expanding. The Model Portfolio of the Buffett-Munger screener has outperformed the market every year since inception in 2009.
Southwest Airlines Co Operating Margin % Related Terms
Southwest Airlines Co Operating Margin % Historical Data
* Premium members only.
The historical data trend for Southwest Airlines Co's Operating 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: Operating Margin % Comparison
For the Airlines subindustry, Southwest Airlines Co's Operating Margin %, along with its competitors' market caps and Operating 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 Operating Margin % vs Transportation Industry
For the Transportation industry and Industrials sector, Southwest Airlines Co's Operating Margin % distribution charts can be found below:
* The bar in red indicates where Southwest Airlines Co's Operating Margin % falls into.
Southwest Airlines Co Operating Margin % Calculation
Operating Margin % - also known as operating income margin, operating profit margin and return on sales (ROS) - is the ratio of Operating Income divided by net sales or Revenue, usually presented in percent.
Southwest Airlines Co's Operating Margin % for the fiscal year that ended in Dec. 2025 is calculated as
* 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.
Southwest Airlines Co (STU:SWN) has a Operating Margin % of 4.55% as of Mar. 2026. Operating margin is the ratio of total operating income to net sales. View historical data on Southwest Airlines Co and its competitors. This is 40% below median its historical median of 7.59. According to the industry distribution chart, Southwest Airlines Co ranks #701 out of 1007 companies in the Transportation industry, placing it in the top 69.6%.
Is Southwest Airlines Co's Operating Margin % too high?
Southwest Airlines Co's current Operating Margin % of 4.55% is 40% below median its 10-year median of 7.59. The Transportation industry median Operating Margin % is 7.36. Southwest Airlines Co's value of 4.55% is 38.2% below this industry median. Based on the distribution chart, Southwest Airlines Co ranks #701 out of 1007 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 Operating Margin % compare to AAL and CPA?
According to the Transportation industry distribution chart, Southwest Airlines Co ranks #701 out of 1007 companies for Operating Margin %. This places Southwest Airlines Co in the lower half of its industry. The industry median Operating Margin % is 7.36. Southwest Airlines Co's value of 4.55% is 38.2% below this benchmark. While the company's 10-year median is 7.59 vs. the industry median of 7.36, 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 Operating Margin % for a Transportation company?
The median Operating Margin % among Transportation companies is 7.36, based on 1,007 companies in the industry. Companies in the top quartile (top 25%) have a Operating Margin % significantly above this median, while those in the bottom quartile fall well below. However, Operating Margin % should not be evaluated in isolation — investors should consider it alongside profitability, growth, and financial strength metrics. Southwest Airlines Co's current Operating Margin % of 4.55% is 38.2% 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 Operating Margin % mean?
A high Operating Margin % can signal that a stock is expensive relative to its fundamentals. Operating margin is the ratio of total operating income to net sales. View historical data on Southwest Airlines Co and its competitors. For the Transportation industry, the median Operating Margin % is 7.36 — values significantly above this may indicate overvaluation, while values below may suggest a bargain or underlying issues. Southwest Airlines Co's current Operating Margin % is 4.55%, which is 40% below median its own 10-year median of 7.59. 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 Operating Margin % is 4.55%, which is 40% below median its 10-year median of 7.59 and 38.2% below the Transportation industry median of 7.36. 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 Operating Margin % calculated?
Operating Margin % is calculated from a company's financial statements. For Southwest Airlines Co (STU:SWN), the current Operating Margin % is 4.55% 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:
Operating Margin %: 4.55% (40% below median its 10-year median of 7.59)
GF Value™: €36.52 vs. price of €45.12 (23.5% above fair value)
Industry Position: 38.2% below the Transportation median (#701 of 1007)
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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Operating Margin % is just one metric. See GF Value™, 30-year financials, guru trades, warning signs, and more.
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