Southwest Airlines stock has been knocked down by a number of headwinds this year. But the company still has a high profit margin and plenty of room to grow. It could even be an acquisition target for Warren Buffett’s Berkshire Hathaway.
Southwest Airlines (NYSE:LUV) has cut its guidance twice in the last two months, but the airline achieved a record adjusted profit and record free cash flow in 2018. The company has also affirmed that demand trends for the second quarter look strong, pointing to the potential for a quick return to profit growth.
Meanwhile, Southwest Airlines stock trades for just 10 times free cash flow: a remarkably low valuation for a company that consistently posts strong margins while growing steadily.
So it’s no wonder that Warren Buffett has invested in Southwest Airlines. And recent rumors suggest that Buffett sees Southwest as a possible acquisition target for Berkshire Hathaway (NYSE:BRK-A) (NYSE:BRK-B). Industry Focus: Energy host Nick Sciple and guest Adam Levine-Weinberg review the case for owning Southwest Airlines stock and assess the likelihood of a takeover by Berkshire Hathaway.
https://www.fool.com/investing/2019/04/08/is-southwest-airlines-stock-a-buy-warren-buffett-t.aspx