Intrinsic value of Delta Air Lines - DAL

Previous Close

$51.99

  Intrinsic Value

$123.17

stock screener

  Rating & Target

str. buy

+137%

Previous close

$51.99

 
Intrinsic value

$123.17

 
Up/down potential

+137%

 
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 2017), $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 37.1

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  4.10
  4.19
  4.27
  4.34
  4.41
  4.47
  4.52
  4.57
  4.61
  4.65
  4.69
  4.72
  4.75
  4.77
  4.79
  4.81
  4.83
  4.85
  4.86
  4.88
  4.89
  4.90
  4.91
  4.92
  4.93
  4.94
  4.94
  4.95
  4.95
  4.96
Revenue, $m
  42,935
  44,734
  46,645
  48,671
  50,817
  53,088
  55,488
  58,024
  60,700
  63,523
  66,500
  69,637
  72,942
  76,423
  80,086
  83,942
  87,999
  92,267
  96,756
  101,476
  106,439
  111,656
  117,140
  122,904
  128,960
  135,325
  142,013
  149,039
  156,421
  164,176
Variable operating expenses, $m
  35,361
  36,782
  38,290
  39,890
  41,584
  43,377
  45,272
  47,274
  49,387
  51,616
  52,502
  54,979
  57,588
  60,336
  63,228
  66,273
  69,476
  72,845
  76,389
  80,116
  84,034
  88,153
  92,482
  97,033
  101,814
  106,839
  112,119
  117,667
  123,494
  129,617
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
  35,361
  36,782
  38,290
  39,890
  41,584
  43,377
  45,272
  47,274
  49,387
  51,616
  52,502
  54,979
  57,588
  60,336
  63,228
  66,273
  69,476
  72,845
  76,389
  80,116
  84,034
  88,153
  92,482
  97,033
  101,814
  106,839
  112,119
  117,667
  123,494
  129,617
Operating income, $m
  7,574
  7,952
  8,355
  8,781
  9,233
  9,711
  10,216
  10,750
  11,313
  11,907
  13,998
  14,659
  15,354
  16,087
  16,858
  17,670
  18,524
  19,422
  20,367
  21,361
  22,405
  23,503
  24,658
  25,871
  27,146
  28,486
  29,893
  31,372
  32,926
  34,559
EBITDA, $m
  13,211
  13,765
  14,352
  14,976
  15,636
  16,335
  17,074
  17,854
  18,677
  19,546
  20,462
  21,427
  22,444
  23,515
  24,642
  25,829
  27,077
  28,391
  29,772
  31,224
  32,751
  34,356
  36,044
  37,817
  39,681
  41,639
  43,697
  45,859
  48,130
  50,517
Interest expense (income), $m
  385
  477
  564
  657
  755
  860
  970
  1,088
  1,211
  1,342
  1,480
  1,626
  1,779
  1,941
  2,111
  2,291
  2,480
  2,678
  2,887
  3,108
  3,339
  3,582
  3,838
  4,107
  4,390
  4,687
  4,999
  5,328
  5,672
  6,035
  6,415
Earnings before tax, $m
  7,097
  7,388
  7,698
  8,026
  8,373
  8,740
  9,129
  9,539
  9,971
  10,427
  12,373
  12,880
  13,413
  13,976
  14,567
  15,190
  15,845
  16,535
  17,259
  18,022
  18,823
  19,665
  20,551
  21,481
  22,459
  23,486
  24,566
  25,700
  26,892
  28,144
Tax expense, $m
  1,916
  1,995
  2,078
  2,167
  2,261
  2,360
  2,465
  2,575
  2,692
  2,815
  3,341
  3,477
  3,622
  3,773
  3,933
  4,101
  4,278
  4,464
  4,660
  4,866
  5,082
  5,310
  5,549
  5,800
  6,064
  6,341
  6,633
  6,939
  7,261
  7,599
Net income, $m
  5,181
  5,393
  5,619
  5,859
  6,112
  6,380
  6,664
  6,963
  7,279
  7,612
  9,032
  9,402
  9,792
  10,202
  10,634
  11,089
  11,567
  12,070
  12,599
  13,156
  13,741
  14,356
  15,002
  15,681
  16,395
  17,145
  17,933
  18,761
  19,631
  20,545

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
  55,472
  57,796
  60,264
  62,882
  65,655
  68,589
  71,690
  74,966
  78,424
  82,072
  85,918
  89,971
  94,241
  98,737
  103,471
  108,453
  113,694
  119,208
  125,008
  131,106
  137,518
  144,259
  151,344
  158,790
  166,616
  174,839
  183,479
  192,557
  202,094
  212,113
Adjusted assets (=assets-cash), $m
  55,472
  57,796
  60,264
  62,882
  65,655
  68,589
  71,690
  74,966
  78,424
  82,072
  85,918
  89,971
  94,241
  98,737
  103,471
  108,453
  113,694
  119,208
  125,008
  131,106
  137,518
  144,259
  151,344
  158,790
  166,616
  174,839
  183,479
  192,557
  202,094
  212,113
Revenue / Adjusted assets
  0.774
  0.774
  0.774
  0.774
  0.774
  0.774
  0.774
  0.774
  0.774
  0.774
  0.774
  0.774
  0.774
  0.774
  0.774
  0.774
  0.774
  0.774
  0.774
  0.774
  0.774
  0.774
  0.774
  0.774
  0.774
  0.774
  0.774
  0.774
  0.774
  0.774
Average production assets, $m
  41,733
  43,481
  45,339
  47,308
  49,394
  51,601
  53,934
  56,399
  59,000
  61,745
  64,638
  67,688
  70,900
  74,283
  77,844
  81,592
  85,535
  89,684
  94,047
  98,635
  103,459
  108,530
  113,860
  119,462
  125,350
  131,536
  138,036
  144,866
  152,041
  159,579
Working capital, $m
  -2,447
  -2,550
  -2,659
  -2,774
  -2,897
  -3,026
  -3,163
  -3,307
  -3,460
  -3,621
  -3,791
  -3,969
  -4,158
  -4,356
  -4,565
  -4,785
  -5,016
  -5,259
  -5,515
  -5,784
  -6,067
  -6,364
  -6,677
  -7,005
  -7,351
  -7,714
  -8,095
  -8,495
  -8,916
  -9,358
Total debt, $m
  10,445
  12,163
  13,987
  15,922
  17,971
  20,139
  22,431
  24,852
  27,407
  30,103
  32,945
  35,940
  39,096
  42,419
  45,917
  49,598
  53,472
  57,547
  61,833
  66,339
  71,078
  76,059
  81,295
  86,798
  92,581
  98,658
  105,043
  111,752
  118,799
  126,204
Total liabilities, $m
  40,993
  42,711
  44,535
  46,470
  48,519
  50,687
  52,979
  55,400
  57,955
  60,651
  63,493
  66,488
  69,644
  72,967
  76,465
  80,146
  84,020
  88,095
  92,381
  96,887
  101,626
  106,607
  111,843
  117,346
  123,129
  129,206
  135,591
  142,300
  149,347
  156,752
Total equity, $m
  14,478
  15,085
  15,729
  16,412
  17,136
  17,902
  18,711
  19,566
  20,469
  21,421
  22,425
  23,482
  24,597
  25,770
  27,006
  28,306
  29,674
  31,113
  32,627
  34,219
  35,892
  37,651
  39,501
  41,444
  43,487
  45,633
  47,888
  50,257
  52,747
  55,362
Total liabilities and equity, $m
  55,471
  57,796
  60,264
  62,882
  65,655
  68,589
  71,690
  74,966
  78,424
  82,072
  85,918
  89,970
  94,241
  98,737
  103,471
  108,452
  113,694
  119,208
  125,008
  131,106
  137,518
  144,258
  151,344
  158,790
  166,616
  174,839
  183,479
  192,557
  202,094
  212,114
Debt-to-equity ratio
  0.720
  0.810
  0.890
  0.970
  1.050
  1.120
  1.200
  1.270
  1.340
  1.410
  1.470
  1.530
  1.590
  1.650
  1.700
  1.750
  1.800
  1.850
  1.900
  1.940
  1.980
  2.020
  2.060
  2.090
  2.130
  2.160
  2.190
  2.220
  2.250
  2.280
Adjusted equity ratio
  0.261
  0.261
  0.261
  0.261
  0.261
  0.261
  0.261
  0.261
  0.261
  0.261
  0.261
  0.261
  0.261
  0.261
  0.261
  0.261
  0.261
  0.261
  0.261
  0.261
  0.261
  0.261
  0.261
  0.261
  0.261
  0.261
  0.261
  0.261
  0.261
  0.261

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  5,181
  5,393
  5,619
  5,859
  6,112
  6,380
  6,664
  6,963
  7,279
  7,612
  9,032
  9,402
  9,792
  10,202
  10,634
  11,089
  11,567
  12,070
  12,599
  13,156
  13,741
  14,356
  15,002
  15,681
  16,395
  17,145
  17,933
  18,761
  19,631
  20,545
Depreciation, amort., depletion, $m
  5,637
  5,812
  5,998
  6,195
  6,404
  6,624
  6,858
  7,104
  7,364
  7,639
  6,464
  6,769
  7,090
  7,428
  7,784
  8,159
  8,554
  8,968
  9,405
  9,863
  10,346
  10,853
  11,386
  11,946
  12,535
  13,154
  13,804
  14,487
  15,204
  15,958
Funds from operations, $m
  10,818
  11,206
  11,617
  12,054
  12,516
  13,005
  13,521
  14,067
  14,643
  15,251
  15,496
  16,171
  16,882
  17,631
  18,419
  19,248
  20,121
  21,039
  22,004
  23,019
  24,087
  25,209
  26,388
  27,627
  28,930
  30,299
  31,737
  33,248
  34,835
  36,503
Change in working capital, $m
  -96
  -103
  -109
  -115
  -122
  -129
  -137
  -145
  -153
  -161
  -170
  -179
  -188
  -198
  -209
  -220
  -231
  -243
  -256
  -269
  -283
  -297
  -313
  -329
  -345
  -363
  -381
  -400
  -421
  -442
Cash from operations, $m
  10,914
  11,308
  11,726
  12,169
  12,638
  13,134
  13,658
  14,212
  14,796
  15,412
  15,666
  16,350
  17,070
  17,829
  18,627
  19,468
  20,352
  21,282
  22,260
  23,288
  24,369
  25,506
  26,701
  27,956
  29,275
  30,661
  32,118
  33,648
  35,256
  36,945
Maintenance CAPEX, $m
  -4,011
  -4,173
  -4,348
  -4,534
  -4,731
  -4,939
  -5,160
  -5,393
  -5,640
  -5,900
  -6,174
  -6,464
  -6,769
  -7,090
  -7,428
  -7,784
  -8,159
  -8,554
  -8,968
  -9,405
  -9,863
  -10,346
  -10,853
  -11,386
  -11,946
  -12,535
  -13,154
  -13,804
  -14,487
  -15,204
New CAPEX, $m
  -1,624
  -1,749
  -1,857
  -1,969
  -2,086
  -2,207
  -2,333
  -2,465
  -2,601
  -2,744
  -2,893
  -3,049
  -3,212
  -3,383
  -3,561
  -3,748
  -3,944
  -4,148
  -4,363
  -4,588
  -4,824
  -5,071
  -5,330
  -5,602
  -5,887
  -6,186
  -6,500
  -6,830
  -7,175
  -7,538
Cash from investing activities, $m
  -5,635
  -5,922
  -6,205
  -6,503
  -6,817
  -7,146
  -7,493
  -7,858
  -8,241
  -8,644
  -9,067
  -9,513
  -9,981
  -10,473
  -10,989
  -11,532
  -12,103
  -12,702
  -13,331
  -13,993
  -14,687
  -15,417
  -16,183
  -16,988
  -17,833
  -18,721
  -19,654
  -20,634
  -21,662
  -22,742
Free cash flow, $m
  5,279
  5,386
  5,521
  5,666
  5,821
  5,988
  6,165
  6,354
  6,554
  6,767
  6,598
  6,836
  7,089
  7,356
  7,638
  7,935
  8,249
  8,580
  8,929
  9,296
  9,682
  10,089
  10,517
  10,968
  11,442
  11,940
  12,464
  13,015
  13,594
  14,203
Issuance/(repayment) of debt, $m
  1,611
  1,718
  1,824
  1,935
  2,049
  2,168
  2,292
  2,421
  2,555
  2,696
  2,842
  2,995
  3,155
  3,323
  3,498
  3,682
  3,874
  4,075
  4,286
  4,507
  4,738
  4,981
  5,236
  5,503
  5,783
  6,077
  6,385
  6,709
  7,048
  7,404
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  
  1,611
  1,718
  1,824
  1,935
  2,049
  2,168
  2,292
  2,421
  2,555
  2,696
  2,842
  2,995
  3,155
  3,323
  3,498
  3,682
  3,874
  4,075
  4,286
  4,507
  4,738
  4,981
  5,236
  5,503
  5,783
  6,077
  6,385
  6,709
  7,048
  7,404
Total cash flow (excl. dividends), $m
  6,891
  7,104
  7,345
  7,600
  7,870
  8,156
  8,457
  8,775
  9,110
  9,463
  9,440
  9,832
  10,245
  10,679
  11,136
  11,617
  12,123
  12,655
  13,214
  13,802
  14,421
  15,070
  15,753
  16,471
  17,225
  18,017
  18,849
  19,724
  20,642
  21,607
Retained Cash Flow (-), $m
  -568
  -607
  -644
  -683
  -724
  -766
  -809
  -855
  -903
  -952
  -1,004
  -1,058
  -1,114
  -1,174
  -1,235
  -1,300
  -1,368
  -1,439
  -1,514
  -1,592
  -1,673
  -1,759
  -1,849
  -1,944
  -2,042
  -2,146
  -2,255
  -2,369
  -2,489
  -2,615
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
  6,323
  6,497
  6,701
  6,917
  7,147
  7,390
  7,647
  7,920
  8,207
  8,511
  8,436
  8,774
  9,130
  9,505
  9,901
  10,317
  10,755
  11,216
  11,701
  12,211
  12,747
  13,311
  13,904
  14,527
  15,182
  15,871
  16,594
  17,354
  18,153
  18,992
Discount rate, %
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
  6,062
  5,948
  5,832
  5,696
  5,540
  5,363
  5,166
  4,950
  4,715
  4,462
  4,006
  3,744
  3,471
  3,191
  2,907
  2,622
  2,340
  2,065
  1,802
  1,552
  1,318
  1,104
  911
  740
  591
  463
  356
  268
  198
  143
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 (DAL)

Valuation Ratios
P/E Ratio 8.7
Price to Sales 1
Price to Book 3.1
Price to Tangible Book
Price to Cash Flow 5.3
Price to Free Cash Flow 10
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 $41244 million for the last fiscal year's total revenue generated by Delta Air Lines. The default revenue input number comes from 2017 income statement of Delta Air Lines. 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 4.1% 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 4.3%, whose default value for DAL is calculated based on our internal credit rating of Delta Air Lines, 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.
    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 82.5%.

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.

Corporate tax rate of 27% is the nominal tax rate for Delta Air Lines. 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 97.2%.

Life of production assets of 10 years is the average useful life of capital assets used in Delta Air Lines 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 -5.7%. 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 - $13910 million for Delta Air Lines - 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 713 million for Delta Air Lines 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 at the current share price and the inputted number of shares is $37.1 billion.

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