Discounted Cash Flow (DCF) Analysis Unlevered

Southwest Airlines Co. (LUV)

$36.73

+0.61 (+1.69%)
All numbers are in Millions, Currency in USD
Stock DCF: 22.34 | 36.73 | overvalue

Operating Data

Year
A/P
2017
Actual
2018
Actual
2019
Actual
2020
Actual
2021
Actual
2022
Projected
2023
Projected
2024
Projected
2025
Projected
2026
Projected
Revenue 21,17121,96522,4289,04815,79016,607.7017,467.7518,372.3419,323.7720,324.47
Revenue (%)
EBITDA 4,5344,4584,258-2,6873,0281,666.641,752.951,843.731,939.212,039.63
EBITDA (%)
EBIT 3,3163,2573,039-3,9421,756385.11405.06426.03448.10471.30
EBIT (%)
Depreciation 1,2181,2011,2191,2551,2721,281.531,347.891,417.691,491.111,568.33
Depreciation (%)

Balance Sheet Data

Year
A/P
2017
Actual
2018
Actual
2019
Actual
2020
Actual
2021
Actual
2022
Projected
2023
Projected
2024
Projected
2025
Projected
2026
Projected
Total Cash 3,2733,6894,07213,33415,5049,830.7310,339.8210,875.2811,438.4712,030.82
Total Cash (%)
Account Receivables 6625681,0861,1301,3571,050.871,105.291,162.531,222.731,286.05
Account Receivables (%)
Inventories 420461529414537478.89503.69529.78557.21586.07
Inventories (%)
Accounts Payable 1862633041111,282424.40446.38469.49493.81519.38
Accounts Payable (%)
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 (%)

Weighted Average Cost Of Capital

Share price $ 36.73
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 7.245
Total Debt 12,281
Total Equity 22,295.11
Total Capital 34,576.11
Debt Weighting 35.52
Equity Weighting 64.48
Wacc

Build Up Free Cash

Year
A/P
2017
Actual
2018
Actual
2019
Actual
2020
Actual
2021
Actual
2022
Projected
2023
Projected
2024
Projected
2025
Projected
2026
Projected
Revenue 21,17121,96522,4289,04815,79016,607.7017,467.7518,372.3419,323.7720,324.47
EBITDA 4,5344,4584,258-2,6873,0281,666.641,752.951,843.731,939.212,039.63
EBIT 3,3163,2573,039-3,9421,756385.11405.06426.03448.10471.30
Tax Rate -7.29%22.09%22.22%27.77%26.26%18.21%18.21%18.21%18.21%18.21%
EBIAT 3,557.742,537.452,363.78-2,847.211,294.80314.98331.29348.45366.49385.47
Depreciation 1,2181,2011,2191,2551,2721,281.531,347.891,417.691,491.111,568.33
Accounts Receivable -94-518-44-227306.13-54.42-57.24-60.20-63.32
Inventories --41-68115-12358.11-24.80-26.08-27.44-28.86
Accounts Payable -7741-1931,171-857.6021.9823.1224.3125.57
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
UFCF 2,526.741,892.452,010.78-2,229.212,876.802.84464.65488.72514.03540.65
WACC
PV UFCF 2.69416.76415.14413.52411.91
SUM PV UFCF 1,660.01

Terminal Value

Growth in perpetuity method:
Long-term growth rate
WACC (%) 5.59
Free cash flow (t + 1) 551.46
Terminal Value 15,360.97
Present Value of Terminal Value 11,703.20

Intrinsic Value

Enterprise Value 13,363.21
Net Debt -199
Equity Value 13,562.21
Shares Outstanding 607
Equity Value Per Share 22.34