Discounted Cash Flow (DCF) Analysis Levered
Southwest Airlines Co. (LUV)
$37.73
+1.79 (+4.98%)
All numbers are in Millions, Currency in USD
Free Cash Flow
Year A/P | 2017 Actual | 2018 Actual | 2019 Actual | 2020 Actual | 2021 Actual | 2022 Projected | 2023 Projected | 2024 Projected | 2025 Projected | 2026 Projected |
| Revenue | 21,171 | 21,965 | 22,428 | 9,048 | 15,790 | 16,607.70 | 17,467.75 | 18,372.34 | 19,323.77 | 20,324.47 |
|---|---|---|---|---|---|---|---|---|---|---|
| Revenue (%) | ||||||||||
| Operating Cash Flow | 3,929 | 4,893 | 3,987 | -1,127 | 2,322 | 2,021.53 | 2,126.22 | 2,236.33 | 2,352.14 | 2,473.95 |
| Operating Cash Flow (%) | ||||||||||
| Capital Expenditure | -2,249 | -1,976 | -1,027 | -515 | -511 | -1,100.30 | -1,157.29 | -1,217.22 | -1,280.25 | -1,346.55 |
| Capital Expenditure (%) | ||||||||||
| Free Cash Flow | 1,680 | 2,917 | 2,960 | -1,642 | 1,811 | 921.23 | 968.94 | 1,019.11 | 1,071.89 | 1,127.40 |
Weighted Average Cost Of Capital
| Share price | $ 37.73 |
|---|---|
| Beta | 0.923 |
| Diluted Shares Outstanding | 607 |
| Cost of Debt | |
| Tax Rate | 26.26 |
| After-tax Cost of Debt | 2.59% |
| Risk-Free Rate | |
| Market Risk Premium | |
| Cost of Equity | 7.481 |
| Total Debt | 12,281 |
| Total Equity | 22,902.11 |
| Total Capital | 35,183.11 |
| Debt Weighting | 34.91 |
| Equity Weighting | 65.09 |
| Wacc |
Build Up Free Cash Flow
Year A/P | 2017 Actual | 2018 Actual | 2019 Actual | 2020 Actual | 2021 Actual | 2022 Projected | 2023 Projected | 2024 Projected | 2025 Projected | 2026 Projected |
| Revenue | 21,171 | 21,965 | 22,428 | 9,048 | 15,790 | 16,607.70 | 17,467.75 | 18,372.34 | 19,323.77 | 20,324.47 |
|---|---|---|---|---|---|---|---|---|---|---|
| Operating Cash Flow | 3,929 | 4,893 | 3,987 | -1,127 | 2,322 | 2,021.53 | 2,126.22 | 2,236.33 | 2,352.14 | 2,473.95 |
| Capital Expenditure | -2,249 | -1,976 | -1,027 | -515 | -511 | -1,100.30 | -1,157.29 | -1,217.22 | -1,280.25 | -1,346.55 |
| Free Cash Flow | 1,680 | 2,917 | 2,960 | -1,642 | 1,811 | 921.23 | 968.94 | 1,019.11 | 1,071.89 | 1,127.40 |
| WACC | ||||||||||
| PV LFCF | 870.97 | 866.10 | 861.26 | 856.45 | 851.66 | |||||
| SUM PV LFCF | 4,306.45 |
Terminal Value
| Growth in perpetuity method: | |
|---|---|
| Long-term growth rate | |
| WACC (%) | 5.77 |
| Free cash flow (t + 1) | 1,149.95 |
| Terminal Value | 30,502.58 |
| Present Value of Terminal Value | 23,042.21 |
Intrinsic Value
| Enterprise Value | 27,348.65 |
|---|---|
| Net Debt | -199 |
| Equity Value | 27,547.65 |
| Shares Outstanding | 607 |
| Equity Value Per Share | 45.38 |