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Discounted Cash Flow (DCF) Analysis Unlevered


Southwest Airlines Company

Southwest Airlines Company (LUV)

Industrials

Operating Data

Year
A/P
2013
Actual
2014
Actual
2015
Actual
2016
Actual
2017
Actual
2018
Actual
2019
Projected
2020
Projected
2021
Projected
2022
Projected
2023
Projected
Revenue 17,699.0018,605.1919,820.1120,289.8421,146.0821,964.4322,935.2623,948.9925,007.5426,112.8727,267.06
Revenue (%)
EBITDA 2,207.072,883.804,614.124,792.464,597.164,496.124,474.674,672.454,878.975,094.625,319.80
EBITDA (%)
EBIT 1,339.811,946.103,599.333,571.013,379.143,294.663,240.753,383.993,533.573,689.753,852.84
EBIT (%)
Depreciation 867.25937.701,014.791,221.451,218.011,201.451,233.921,288.461,345.411,404.871,466.97
Depreciation (%)

Balance Sheet Data

Year
A/P
2013
Actual
2014
Actual
2015
Actual
2016
Actual
2017
Actual
2018
Actual
2019
Projected
2020
Projected
2021
Projected
2022
Projected
2023
Projected
Total Cash 3,152.192,987.993,050.313,305.223,273.413,690.023,738.453,903.694,076.234,256.404,444.53
Total Cash (%)
Account Receivables 419.47364.66473.70545.80661.87568.88577.97603.51630.19658.04687.13
Account Receivables (%)
Inventories 467.25342.34311.18336.81420.81461.25451.82471.80492.65514.42537.16
Inventories (%)
Accounts Payable 1,247.781,203.761,187.221,178.841,319.521,416.711,451.801,515.971,582.981,652.941,726.01
Accounts Payable (%)
Capital Expenditure -1,433.62-1,748.89-2,041.47-2,037.10-2,123.07-1,921.89-2,165.09-2,260.79-2,360.71-2,465.06-2,574.01
Capital Expenditure (%)

Weighted Average Cost Of Capital

Share price $ 50.36
Diluted Shares Outstanding 574.00
Cost of Debt
Tax Rate 22.09
After-tax Cost of Debt -1.05
Risk-Free Rate
Market Risk Premium
Cost of Equity 14.30
Total Debt 2,771.00
Total Equity 28,906.64
Total Capital 31,677.64
Debt Weighting 8.75
Equity Weighting 91.25
Wacc

Build Up Free Cash

Year
A/P
2013
Actual
2014
Actual
2015
Actual
2016
Actual
2017
Actual
2018
Actual
2019
Projected
2020
Projected
2021
Projected
2022
Projected
2023
Projected
Revenue 17,699.0018,605.1919,820.1120,289.8421,146.0821,964.4322,935.2623,948.9925,007.5426,112.8727,267.06
EBITDA 2,207.072,883.804,614.124,792.464,597.164,496.124,474.674,672.454,878.975,094.625,319.80
EBIT 1,339.811,946.103,599.333,571.013,379.143,294.663,240.753,383.993,533.573,689.753,852.84
Tax Rate 37.63%37.44%37.31%36.72%-2.82%22.09%28.06%28.06%28.06%28.06%28.06%
EBIAT 835.581,217.392,256.442,259.573,474.362,566.802,331.252,434.292,541.882,654.232,771.55
Depreciation 867.25937.701,014.791,221.451,218.011,201.451,233.921,288.461,345.411,404.871,466.97
Accounts Receivable -54.80-109.04-72.10-116.0892.99-9.09-25.55-26.68-27.85-29.09
Inventories -124.9231.16-25.64-84.00-40.459.43-19.97-20.85-21.78-22.74
Accounts Payable --44.02-16.53-8.38140.6897.1935.1064.1767.0169.9773.06
Capital Expenditure -315.27292.58-4.3785.97-201.18243.2095.7099.93104.34108.96
UFCF 1,702.832,606.063,469.403,370.534,718.943,716.813,843.803,837.094,006.694,183.794,368.71
WACC
PV UFCF 3,389.892,984.372,748.282,530.872,330.66
SUM PV UFCF 18,792.94

Terminal Value

Growth in perpetuity method:
Long-term growth rate
WACC (%) 13.39
Free cash flow (t + 1) 4,543.46
Terminal Value 48,386.14
Present Value of Terminal Value 25,813.52

Intrinsic Value

Enterprise Value 44,606.46
Net Debt -919.02
Equity Value 45,525.48
Shares Outstanding 574.00
Equity Value Per Share 79.31