Intrinsic value of Delta Air Lines, Inc. - DAL

Previous Close

$55.38

  Intrinsic Value

$109.62

stock screener

  Rating & Target

str. buy

+98%

Previous close

$55.38

 
Intrinsic value

$109.62

 
Up/down potential

+98%

 
Rating

str. buy

We calculate the intrinsic value of DAL stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 0001), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 37.6

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
Revenue, $m
  46,660
  48,993
  51,443
  54,015
  56,715
  59,551
  62,529
  65,655
  68,938
  72,385
  76,004
  79,804
  83,794
  87,984
  92,383
  97,003
  101,853
  106,945
  112,293
  117,907
  123,803
  129,993
  136,492
  143,317
  150,483
  158,007
  165,907
  174,203
  182,913
  192,058
Variable operating expenses, $m
  39,821
  41,739
  43,753
  45,868
  48,088
  50,419
  52,867
  55,438
  58,136
  60,970
  62,484
  65,609
  68,889
  72,334
  75,950
  79,748
  83,735
  87,922
  92,318
  96,934
  101,781
  106,870
  112,213
  117,824
  123,715
  129,901
  136,396
  143,216
  150,376
  157,895
Fixed operating expenses, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  39,821
  41,739
  43,753
  45,868
  48,088
  50,419
  52,867
  55,438
  58,136
  60,970
  62,484
  65,609
  68,889
  72,334
  75,950
  79,748
  83,735
  87,922
  92,318
  96,934
  101,781
  106,870
  112,213
  117,824
  123,715
  129,901
  136,396
  143,216
  150,376
  157,895
Operating income, $m
  6,839
  7,254
  7,689
  8,147
  8,627
  9,132
  9,661
  10,218
  10,802
  11,415
  13,520
  14,196
  14,905
  15,651
  16,433
  17,255
  18,118
  19,023
  19,975
  20,973
  22,022
  23,123
  24,279
  25,493
  26,768
  28,106
  29,512
  30,987
  32,536
  34,163
EBITDA, $m
  10,316
  10,832
  11,373
  11,942
  12,539
  13,166
  13,824
  14,515
  15,241
  16,003
  16,803
  17,643
  18,526
  19,452
  20,424
  21,446
  22,518
  23,644
  24,826
  26,067
  27,371
  28,739
  30,176
  31,685
  33,269
  34,933
  36,679
  38,513
  40,439
  42,461
Interest expense (income), $m
  385
  892
  1,020
  1,152
  1,291
  1,436
  1,589
  1,750
  1,919
  2,096
  2,282
  2,477
  2,682
  2,897
  3,123
  3,360
  3,610
  3,871
  4,146
  4,434
  4,737
  5,055
  5,389
  5,740
  6,108
  6,494
  6,900
  7,326
  7,774
  8,244
  8,737
Earnings before tax, $m
  5,946
  6,234
  6,537
  6,856
  7,191
  7,542
  7,911
  8,299
  8,706
  9,133
  11,043
  11,514
  12,008
  12,527
  13,073
  13,645
  14,246
  14,877
  15,540
  16,236
  16,967
  17,734
  18,540
  19,385
  20,273
  21,206
  22,185
  23,213
  24,293
  25,426
Tax expense, $m
  1,605
  1,683
  1,765
  1,851
  1,942
  2,036
  2,136
  2,241
  2,351
  2,466
  2,982
  3,109
  3,242
  3,382
  3,530
  3,684
  3,847
  4,017
  4,196
  4,384
  4,581
  4,788
  5,006
  5,234
  5,474
  5,726
  5,990
  6,268
  6,559
  6,865
Net income, $m
  4,341
  4,551
  4,772
  5,005
  5,249
  5,506
  5,775
  6,058
  6,355
  6,667
  8,061
  8,405
  8,766
  9,145
  9,543
  9,961
  10,400
  10,861
  11,344
  11,852
  12,386
  12,946
  13,534
  14,151
  14,800
  15,480
  16,195
  16,946
  17,734
  18,561

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  63,311
  66,476
  69,800
  73,290
  76,954
  80,802
  84,842
  89,084
  93,539
  98,215
  103,126
  108,283
  113,697
  119,382
  125,351
  131,618
  138,199
  145,109
  152,364
  159,983
  167,982
  176,381
  185,200
  194,460
  204,183
  214,392
  225,112
  236,367
  248,186
  260,595
Adjusted assets (=assets-cash), $m
  63,311
  66,476
  69,800
  73,290
  76,954
  80,802
  84,842
  89,084
  93,539
  98,215
  103,126
  108,283
  113,697
  119,382
  125,351
  131,618
  138,199
  145,109
  152,364
  159,983
  167,982
  176,381
  185,200
  194,460
  204,183
  214,392
  225,112
  236,367
  248,186
  260,595
Revenue / Adjusted assets
  0.737
  0.737
  0.737
  0.737
  0.737
  0.737
  0.737
  0.737
  0.737
  0.737
  0.737
  0.737
  0.737
  0.737
  0.737
  0.737
  0.737
  0.737
  0.737
  0.737
  0.737
  0.737
  0.737
  0.737
  0.737
  0.737
  0.737
  0.737
  0.737
  0.737
Average production assets, $m
  36,488
  38,312
  40,228
  42,239
  44,351
  46,569
  48,897
  51,342
  53,909
  56,605
  59,435
  62,407
  65,527
  68,804
  72,244
  75,856
  79,649
  83,631
  87,813
  92,203
  96,814
  101,654
  106,737
  112,074
  117,678
  123,561
  129,740
  136,227
  143,038
  150,190
Working capital, $m
  -12,132
  -12,738
  -13,375
  -14,044
  -14,746
  -15,483
  -16,257
  -17,070
  -17,924
  -18,820
  -19,761
  -20,749
  -21,787
  -22,876
  -24,020
  -25,221
  -26,482
  -27,806
  -29,196
  -30,656
  -32,189
  -33,798
  -35,488
  -37,262
  -39,126
  -41,082
  -43,136
  -45,293
  -47,557
  -49,935
Total debt, $m
  18,887
  21,334
  23,903
  26,601
  29,434
  32,408
  35,531
  38,810
  42,253
  45,869
  49,665
  53,650
  57,836
  62,230
  66,844
  71,689
  76,776
  82,117
  87,726
  93,615
  99,798
  106,290
  113,108
  120,266
  127,781
  135,673
  143,959
  152,660
  161,796
  171,388
Total liabilities, $m
  48,939
  51,386
  53,955
  56,653
  59,486
  62,460
  65,583
  68,862
  72,305
  75,921
  79,717
  83,702
  87,888
  92,282
  96,896
  101,741
  106,828
  112,169
  117,778
  123,667
  129,850
  136,342
  143,160
  150,318
  157,833
  165,725
  174,011
  182,712
  191,848
  201,440
Total equity, $m
  14,372
  15,090
  15,845
  16,637
  17,469
  18,342
  19,259
  20,222
  21,233
  22,295
  23,410
  24,580
  25,809
  27,100
  28,455
  29,877
  31,371
  32,940
  34,587
  36,316
  38,132
  40,038
  42,040
  44,142
  46,350
  48,667
  51,100
  53,655
  56,338
  59,155
Total liabilities and equity, $m
  63,311
  66,476
  69,800
  73,290
  76,955
  80,802
  84,842
  89,084
  93,538
  98,216
  103,127
  108,282
  113,697
  119,382
  125,351
  131,618
  138,199
  145,109
  152,365
  159,983
  167,982
  176,380
  185,200
  194,460
  204,183
  214,392
  225,111
  236,367
  248,186
  260,595
Debt-to-equity ratio
  1.310
  1.410
  1.510
  1.600
  1.680
  1.770
  1.840
  1.920
  1.990
  2.060
  2.120
  2.180
  2.240
  2.300
  2.350
  2.400
  2.450
  2.490
  2.540
  2.580
  2.620
  2.650
  2.690
  2.720
  2.760
  2.790
  2.820
  2.850
  2.870
  2.900
Adjusted equity ratio
  0.227
  0.227
  0.227
  0.227
  0.227
  0.227
  0.227
  0.227
  0.227
  0.227
  0.227
  0.227
  0.227
  0.227
  0.227
  0.227
  0.227
  0.227
  0.227
  0.227
  0.227
  0.227
  0.227
  0.227
  0.227
  0.227
  0.227
  0.227
  0.227
  0.227

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  4,341
  4,551
  4,772
  5,005
  5,249
  5,506
  5,775
  6,058
  6,355
  6,667
  8,061
  8,405
  8,766
  9,145
  9,543
  9,961
  10,400
  10,861
  11,344
  11,852
  12,386
  12,946
  13,534
  14,151
  14,800
  15,480
  16,195
  16,946
  17,734
  18,561
Depreciation, amort., depletion, $m
  3,477
  3,578
  3,684
  3,795
  3,911
  4,034
  4,163
  4,298
  4,440
  4,588
  3,284
  3,448
  3,620
  3,801
  3,991
  4,191
  4,400
  4,621
  4,852
  5,094
  5,349
  5,616
  5,897
  6,192
  6,502
  6,827
  7,168
  7,526
  7,903
  8,298
Funds from operations, $m
  7,818
  8,129
  8,456
  8,800
  9,161
  9,540
  9,938
  10,356
  10,795
  11,256
  11,345
  11,853
  12,386
  12,946
  13,534
  14,152
  14,800
  15,481
  16,196
  16,946
  17,735
  18,562
  19,431
  20,343
  21,301
  22,307
  23,363
  24,472
  25,636
  26,859
Change in working capital, $m
  -578
  -607
  -637
  -669
  -702
  -737
  -774
  -813
  -854
  -896
  -941
  -988
  -1,037
  -1,089
  -1,144
  -1,201
  -1,261
  -1,324
  -1,390
  -1,460
  -1,533
  -1,609
  -1,690
  -1,774
  -1,863
  -1,956
  -2,054
  -2,157
  -2,265
  -2,378
Cash from operations, $m
  8,395
  8,735
  9,093
  9,469
  9,863
  10,277
  10,712
  11,169
  11,648
  12,152
  12,286
  12,841
  13,424
  14,036
  14,678
  15,353
  16,061
  16,805
  17,586
  18,406
  19,267
  20,171
  21,121
  22,118
  23,164
  24,263
  25,417
  26,629
  27,901
  29,237
Maintenance CAPEX, $m
  -1,921
  -2,016
  -2,117
  -2,223
  -2,334
  -2,450
  -2,573
  -2,702
  -2,837
  -2,978
  -3,127
  -3,284
  -3,448
  -3,620
  -3,801
  -3,991
  -4,191
  -4,400
  -4,621
  -4,852
  -5,094
  -5,349
  -5,616
  -5,897
  -6,192
  -6,502
  -6,827
  -7,168
  -7,526
  -7,903
New CAPEX, $m
  -1,726
  -1,824
  -1,916
  -2,011
  -2,112
  -2,218
  -2,328
  -2,445
  -2,567
  -2,695
  -2,830
  -2,972
  -3,120
  -3,276
  -3,440
  -3,612
  -3,793
  -3,982
  -4,182
  -4,391
  -4,610
  -4,841
  -5,083
  -5,337
  -5,604
  -5,884
  -6,178
  -6,487
  -6,811
  -7,152
Cash from investing activities, $m
  -3,647
  -3,840
  -4,033
  -4,234
  -4,446
  -4,668
  -4,901
  -5,147
  -5,404
  -5,673
  -5,957
  -6,256
  -6,568
  -6,896
  -7,241
  -7,603
  -7,984
  -8,382
  -8,803
  -9,243
  -9,704
  -10,190
  -10,699
  -11,234
  -11,796
  -12,386
  -13,005
  -13,655
  -14,337
  -15,055
Free cash flow, $m
  4,749
  4,895
  5,061
  5,235
  5,417
  5,609
  5,811
  6,022
  6,245
  6,478
  6,328
  6,585
  6,855
  7,139
  7,437
  7,749
  8,078
  8,422
  8,784
  9,164
  9,563
  9,982
  10,422
  10,884
  11,369
  11,878
  12,413
  12,974
  13,563
  14,182
Issuance/(repayment) of debt, $m
  2,360
  2,447
  2,569
  2,698
  2,833
  2,974
  3,123
  3,279
  3,443
  3,615
  3,796
  3,986
  4,185
  4,394
  4,614
  4,845
  5,087
  5,341
  5,608
  5,889
  6,183
  6,492
  6,817
  7,158
  7,516
  7,892
  8,286
  8,701
  9,136
  9,592
Issuance/(repurchase) of shares, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  2,360
  2,447
  2,569
  2,698
  2,833
  2,974
  3,123
  3,279
  3,443
  3,615
  3,796
  3,986
  4,185
  4,394
  4,614
  4,845
  5,087
  5,341
  5,608
  5,889
  6,183
  6,492
  6,817
  7,158
  7,516
  7,892
  8,286
  8,701
  9,136
  9,592
Total cash flow (excl. dividends), $m
  7,109
  7,342
  7,630
  7,932
  8,250
  8,584
  8,934
  9,302
  9,688
  10,093
  10,124
  10,571
  11,041
  11,533
  12,051
  12,594
  13,165
  13,764
  14,393
  15,053
  15,746
  16,474
  17,239
  18,042
  18,885
  19,770
  20,699
  21,674
  22,699
  23,775
Retained Cash Flow (-), $m
  -685
  -719
  -755
  -792
  -832
  -873
  -917
  -963
  -1,011
  -1,062
  -1,115
  -1,170
  -1,229
  -1,290
  -1,355
  -1,423
  -1,494
  -1,569
  -1,647
  -1,729
  -1,816
  -1,907
  -2,002
  -2,102
  -2,207
  -2,317
  -2,433
  -2,555
  -2,683
  -2,817
Prev. year cash balance distribution, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
  6,424
  6,623
  6,875
  7,140
  7,418
  7,710
  8,017
  8,339
  8,677
  9,031
  9,010
  9,401
  9,812
  10,243
  10,696
  11,171
  11,671
  12,195
  12,746
  13,324
  13,931
  14,568
  15,237
  15,940
  16,677
  17,452
  18,265
  19,119
  20,016
  20,958
Discount rate, %
  5.70
  5.99
  6.28
  6.60
  6.93
  7.27
  7.64
  8.02
  8.42
  8.84
  9.28
  9.75
  10.24
  10.75
  11.29
  11.85
  12.44
  13.06
  13.72
  14.40
  15.12
  15.88
  16.67
  17.51
  18.38
  19.30
  20.27
  21.28
  22.34
  23.46
PV of cash for distribution, $m
  6,078
  5,896
  5,726
  5,530
  5,307
  5,059
  4,789
  4,498
  4,191
  3,871
  3,393
  3,079
  2,764
  2,453
  2,151
  1,862
  1,590
  1,338
  1,108
  903
  724
  569
  439
  332
  245
  177
  125
  86
  58
  38
Current shareholders' claim on cash, %
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Delta Air Lines, Inc. provides scheduled air transportation for passengers and cargo throughout the United States and across the world. The Company's segments include Airline and Refinery. The Company's route network is centered around a system of hub, international gateway and airports that the Company operates in Amsterdam, Atlanta, Boston, Detroit, London-Heathrow, Los Angeles, Minneapolis-St. Paul, New York-LaGuardia, New York- John F Kennedy International Airport, Paris-Charles de Gaulle, Salt Lake City, Seattle and Tokyo-Narita. Each of these operations includes flights that gather and distribute traffic from markets in the geographic region surrounding the hub or gateway to domestic and international cities and to other hubs or gateways. The Company's route network includes its international joint ventures, its alliances with other foreign airlines, its membership in SkyTeam and agreements with multiple domestic regional carriers that operate as Delta Connection.

FINANCIAL RATIOS  of  Delta Air Lines, Inc. (DAL)

Valuation Ratios
P/E Ratio 9.3
Price to Sales 1
Price to Book 3.3
Price to Tangible Book
Price to Cash Flow 5.6
Price to Free Cash Flow 10.6
Growth Rates
Sales Growth Rate -2.6%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 15.1%
Cap. Spend. - 3 Yr. Gr. Rate 5.7%
Financial Strength
Quick Ratio 3
Current Ratio 0
LT Debt to Equity 50.5%
Total Debt to Equity 59.7%
Interest Coverage 18
Management Effectiveness
Return On Assets 8.9%
Ret/ On Assets - 3 Yr. Avg. 6.6%
Return On Total Capital 22.5%
Ret/ On T. Cap. - 3 Yr. Avg. 16.6%
Return On Equity 37.8%
Return On Equity - 3 Yr. Avg. 30.1%
Asset Turnover 0.8
Profitability Ratios
Gross Margin 56.1%
Gross Margin - 3 Yr. Avg. 48.6%
EBITDA Margin 22.5%
EBITDA Margin - 3 Yr. Avg. 18%
Operating Margin 17.5%
Oper. Margin - 3 Yr. Avg. 13.8%
Pre-Tax Margin 16.7%
Pre-Tax Margin - 3 Yr. Avg. 12.3%
Net Profit Margin 11%
Net Profit Margin - 3 Yr. Avg. 7.9%
Effective Tax Rate 34.1%
Eff/ Tax Rate - 3 Yr. Avg. 36.5%
Payout Ratio 11.6%

DAL stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the DAL stock intrinsic value calculation we used $44438 million for the last fiscal year's total revenue generated by Delta Air Lines, Inc.. The default revenue input number comes from 0001 income statement of Delta Air Lines, Inc.. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our DAL stock valuation model: a) initial revenue growth rate of 5% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 5.7%, whose default value for DAL is calculated based on our internal credit rating of Delta Air Lines, Inc., is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Delta Air Lines, Inc..
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of DAL stock the variable cost ratio is equal to 85.5%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for DAL stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.4% for Delta Air Lines, Inc..

Corporate tax rate of 27% is the nominal tax rate for Delta Air Lines, Inc.. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the DAL stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for DAL are equal to 78.2%.

Life of production assets of 18.1 years is the average useful life of capital assets used in Delta Air Lines, Inc. operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for DAL is equal to -26%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $13687 million for Delta Air Lines, Inc. - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 679.039 million for Delta Air Lines, Inc. is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Delta Air Lines, Inc. at the current share price and the inputted number of shares is $37.6 billion.

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