Calculations for three equities intrinsic values along with a comparison with market stock prices. Evaluation started with equity analysis and rate of return; using DDM valuation model, PVGO, FCFE, residual income and market multiples relative valuation models. Click on the next window to review slides.

1. Equity Analysis

2. Airlines Industry
! Airlines industry is a concentrated industry, in its
mature life stage, with $60.6 bn in revenues and is
expected to annually grow in 2.3% in future.
! US Airways is a major network air carrier with 3,100
flights daily in North America, Europe and, Middle
East.
! Delta offers air transportation globally to about 330
destinations in nearly 65 countries.
! Southwest is a passenger airline that operates in the
US providing point to point and law fare service to 72
cities in 37 states.

3. Statistics
! US Airways
▪ High Low
ROE PVGO
r P/E
Debt Ratio EV/EBITDA
EPS EV/Sales
B0 P/B

4. Statistics
! Southwest
▪ High Low
PVGO ROE
B0 r
P/E Debt Ratio
EV/Sales EPS
P/B
EV/EBITDA

5. Statistics
! Delta
▪ High Low
ROE EV/Sales
EPS Debt Ratio
B0 r
P/E PVGO
EV/EBITDA
P/B

6. Southwest Airlines

7. US Airways

8. Delta Airlines

9. Recommendations
! US Airways: Recommendation to “hold” for short
term, and “buy” on long term. Expected price in
December between $18 and $20.
! Delta Airlines: Recommendation to “buy” for short
term, and “buy” on long term. Expected price in
December between $30 and $35.
! Southwest Airlines: Recommendation to “hold” for
short term, and “sell” on long term. Expected price in
December between $20 and $25.