Discounted Cash Flow (DCF) Analysis Levered

Southwest Airlines Co. (LUV)

$30.7686

+0.18 (+0.58%)
All numbers are in Millions, Currency in USD
Stock DCF: 59.39 | 30.7686 | undervalue

Free Cash Flow

Year
A/P
2018
Actual
2019
Actual
2020
Actual
2021
Actual
2022
Actual
2023
Projected
2024
Projected
2025
Projected
2026
Projected
2027
Projected
Revenue 21,96522,4289,04815,79023,81427,849.3432,568.4838,087.2944,541.2852,088.91
Revenue (%)
Operating Cash Flow 4,8933,987-1,1272,3223,7903,242.663,792.144,434.735,186.216,065.02
Operating Cash Flow (%)
Capital Expenditure -1,976-1,027-515-511-3,946-2,176.34-2,545.12-2,976.40-3,480.76-4,070.58
Capital Expenditure (%)
Free Cash Flow 2,9172,960-1,6421,811-1561,066.331,247.021,458.331,705.451,994.44

Weighted Average Cost Of Capital

Share price $ 30.7,686
Beta 1.141
Diluted Shares Outstanding 607
Cost of Debt
Tax Rate 25.96
After-tax Cost of Debt 2.36%
Risk-Free Rate
Market Risk Premium
Cost of Equity 9.141
Total Debt 9,431
Total Equity 18,676.54
Total Capital 28,107.54
Debt Weighting 33.55
Equity Weighting 66.45
Wacc

Build Up Free Cash Flow

Year
A/P
2018
Actual
2019
Actual
2020
Actual
2021
Actual
2022
Actual
2023
Projected
2024
Projected
2025
Projected
2026
Projected
2027
Projected
Revenue 21,96522,4289,04815,79023,81427,849.3432,568.4838,087.2944,541.2852,088.91
Operating Cash Flow 4,8933,987-1,1272,3223,7903,242.663,792.144,434.735,186.216,065.02
Capital Expenditure -1,976-1,027-515-511-3,946-2,176.34-2,545.12-2,976.40-3,480.76-4,070.58
Free Cash Flow 2,9172,960-1,6421,811-1561,066.331,247.021,458.331,705.451,994.44
WACC
PV LFCF 997.781,091.851,194.781,307.421,430.68
SUM PV LFCF 6,022.50

Terminal Value

Growth in perpetuity method:
Long-term growth rate
WACC (%) 6.87
Free cash flow (t + 1) 2,034.33
Terminal Value 41,772.63
Present Value of Terminal Value 29,964.89

Intrinsic Value

Enterprise Value 35,987.39
Net Debt -61
Equity Value 36,048.39
Shares Outstanding 607
Equity Value Per Share 59.39