Airlines Enterprise Value PEG Model below . Complete a case study of relative valuation. Analyze the
value of your subject company compared to average industry [e.g., XLF] and
cohort (2-4 comparable companies) values.
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Present Relative Valuation (Valuation by Comparables) –
1. Use appropriate relative valuation models and conduct a Valuation by
Comparables of the company that you selected to study. Select a
meaningful Return Ratio and Price Ratio or multiple. Consider using the
most recent 3-5 annual or quarterly periods with mean/median and standard
deviation. [Keep in mind you have a worksheet from Analysis Paper 1 that can be
How do you interpret and explain the results? Why did you choose the
ratios used for the comparison?
Present Enterprise Value and EV / EBITDA Ratio –
2. Post the results of the Enterprise Value of Southwest Airlines, along with
its EV/EBITDA ratio, P/E Ratio, and PEG Ratio, along with those of a few
competitors. Use normalized values – mean/median and standard deviation for
industry [e.g., XLF] and cohort.
What do the results mean?
|Enterprise Value/EBITDA and PEG Ratio|
|Source of Data: MSN.com||Data As Of:||24-May-18|
|COMMON STOCK OUTSTANDING||468.2||123.3||227.3||698.9||579.8||419.5||Number of Shares (Diluted Weighted Average)|
|RECENT SHARE PRICE||$43.56||$59.87||$70.47||$54.40||$51.21||$55.90||Current Stock Price|
|TOTAL DEBT||$24,740.0||$2,580.0||$14,960.0||$9,710.0||$3,227.0||$11,043.4||L/T, S/T & Current Portion of L/T|
|TOTAL CASH AND LIQUID INVESTMENTS||$5,066.0||$1,620.0||$6,352.0||$2,491.0||$1,495.0||$3,404.8||Cash & S/T Investments|
|NET INCOME||$1,919.0||$1,030.0||$2,180.0||$3,560.0||$3,488.0||$2,435.4||Net Income|
|L/T GROWTH RATE||11.51%||12.90%||19.60%||12.90%||21.10%||15.60%||Earnings Growth Rate – Next 5 years|