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Intrinsic Value of Southwest Airlines Company (LUV)

Previous Close$33.62
Intrinsic Value
Upside potential
Previous Close
$33.62

VALUATION INPUT DATA

Revenue, mln $Initial revenue growth rate, %Variable cost ratio, %Fixed operating exp., mln $Prod. assets / Revenue, %Working capital / Revenue, %Interest rate on debt, %Initial discount rate, %Shares outstanding, mlnAdjusted equity ratioAdjusted assets / RevenueCash & ST InvestmentsTotal debt

This valuation is based on fiscal year data as of 2023 and quarterly data as of 2023-12-31.

show cash flow forecast

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year2024202520262027202820292030203120322033203420352036203720382039204020412042204320442045204620472048

INCOME STATEMENT

Revenue growth rate, %5.35.35.35.35.25.25.25.25.25.25.25.25.25.25.15.15.15.15.15.15.15.15.15.15.1
Revenue, $27474289263045032051337323549737350392964133943484457364810150584531915592958803618216498968316718097547779328833718761792074
Variable operating expenses, $m22831240372530426635280312949831038326553435336135380073997242036442024647748865513735400656771596746272165922692827281076514
Fixed operating expenses, $m4530491553335786627868117390801987009440102421111312057130821419415400167091813019671213432315725125272612957832092
Total operating expenses, $m2736128952306373242134309363093842840674430534557548249510855409357284606716426568082721367644281017858789104796543102388108606
Operating income, $m113-26-187-369-577-812-1078-1378-1714-2091-2513-2983-3508-4093-4742-5463-6262-7147-8125-9207-10401-11719-13171-14771-16532
EBITDA, $m16311571149614021287115098679557231417-323-711-1151-1648-2210-2842-3551-4345-5234-6225-7329-8557-9922-11436
Interest expense (income), $m369160216341667170117381776181618581902194819972048210221582217227923442413248525602639272228102901
Earnings before tax, $m-256-1629-1820-2036-2278-2550-2854-3193-3572-3993-4461-4980-5556-6194-6900-7680-8541-9491-10538-11692-12961-14358-15894-17581-19433
Tax expense, $m0000000000000000000000000
Net income, $m-256-1629-1820-2036-2278-2550-2854-3193-3572-3993-4461-4980-5556-6194-6900-7680-8541-9491-10538-11692-12961-14358-15894-17581-19433

BALANCE SHEET

Cash and short-term investments, $m0000000000000000000000000
Total assets, $m16484173551827019231202392129822410235782480326090274422886130351319153355735282370923899440990430864528647597500235257055245
Adjusted assets (=assets-cash), $m16484173551827019231202392129822410235782480326090274422886130351319153355735282370923899440990430864528647597500235257055245
Average production assets, $m21732228802408625353266822807829544310833269934396361773804840012420744424046513489005140754038568015970262748659476930572831
Working capital, $m-6868-7231-7613-8013-8433-8874-9338-9824-10335-10871-11434-12025-12646-13298-13982-14701-15455-16247-17079-17952-18869-19832-20843-21904-23019
Total debt, $m40059408434166642531434384439145392464434754648704499215119852539539465542556977586066031762114640006598168060702447253674943
Total liabilities, $m14836156201644317308182151916820169212202232323481246982597527316287233020231754333833509436891387774075842837450214731349720
Total equity, $m1648173618271923202421302241235824802609274428863035319133563528370938994099430945294760500252575524
Debt-to-equity ratio5.59923.08122.35521.66621.01420.39519.80919.25218.72418.22417.74817.29716.86916.46216.07615.70915.36115.03014.71514.41614.13213.86213.60613.36213.130
Adjusted equity ratio0.1000.1000.1000.1000.1000.1000.1000.1000.1000.1000.1000.1000.1000.1000.1000.1000.1000.1000.1000.1000.1000.1000.1000.1000.100

CASH FLOW

Net income, $m-256-1629-1820-2036-2278-2550-2854-3193-3572-3993-4461-4980-5556-6194-6900-7680-8541-9491-10538-11692-12961-14358-15894-17581-19433
Depreciation, amort., depletion, $m1517159816821771186419622065217222862404252926602798294230943253342035963780397341774390461448495096
Funds from operations, $m1262-31-138-265-414-588-789-1021-1286-1588-1932-2320-2759-3252-3806-4427-5121-5895-6758-7718-8785-9968-11280-12732-14337
Change in working capital, $m-346-363-381-400-420-441-463-486-511-536-563-591-621-652-684-719-754-792-832-873-917-963-1011-1061-1114
Cash from operations, $m16073322431356-147-326-534-775-1052-1369-1729-2138-2600-3122-3708-4366-5103-5926-6845-7868-9005-10269-11670-13223
Maintenance CAPEX, $m-1517-1598-1682-1771-1864-1962-2065-2172-2286-2404-2529-2660-2798-2942-3094-3253-3420-3596-3780-3973-4177-4390-4614-4849-5096
New CAPEX, $m-1094-1149-1206-1266-1330-1396-1466-1539-1616-1697-1782-1871-1964-2062-2165-2273-2387-2506-2632-2763-2901-3046-3198-3358-3526
Total CAPEX, $m-2611-2746-2888-3037-3194-3358-3530-3711-3902-4101-4311-4531-4762-5004-5259-5526-5807-6102-6411-6736-7078-7436-7812-8207-8622
Free cash flow, $m-1004-2414-2645-2902-3188-3505-3856-4246-4677-5153-5679-6260-6900-7605-8381-9235-10173-11205-12338-13581-14946-16441-18081-19877-21845
Issuance/(repurchase) of shares, $m0250127372998328836113968436347995282581464027049776185459407103541139512537137911516616672183242013222112
Retained Cash Flow, $m-12116-87-91-96-101-106-111-117-123-129-135-142-149-156-164-172-181-190-200-210-220-231-243-255-267
Pot'l extraordinary dividend, $m20983
Cash available for distribution, $m7863000000000000000000000000
Discount rate, %4.905.155.405.675.966.256.576.897.247.607.988.388.809.249.7010.1910.7011.2311.7912.3813.0013.6514.3315.0515.80
PV of cash for distribution, $m7495000000000000000000000000
Current shareholders' claim on cash, %100563117952110000000000000000