Intrinsic value of Delta Air Lines - DAL

Previous Close

$52.05

  Intrinsic Value

$194.49

stock screener

  Rating & Target

str. buy

+274%

Previous close

$52.05

 
Intrinsic value

$194.49

 
Up/down potential

+274%

 
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 36.0

 

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, %
  9.60
  9.14
  8.73
  8.35
  8.02
  7.72
  7.44
  7.20
  6.98
  6.78
  6.60
  6.44
  6.30
  6.17
  6.05
  5.95
  5.85
  5.77
  5.69
  5.62
  5.56
  5.50
  5.45
  5.41
  5.37
  5.33
  5.30
  5.27
  5.24
  5.22
Revenue, $m
  45,203
  49,335
  53,640
  58,121
  62,781
  67,625
  72,660
  77,891
  83,328
  88,980
  94,856
  100,968
  107,328
  113,949
  120,846
  128,033
  135,526
  143,342
  151,499
  160,015
  168,910
  178,206
  187,924
  198,086
  208,717
  219,842
  231,488
  243,681
  256,452
  269,830
Variable operating expenses, $m
  37,152
  40,414
  43,813
  47,351
  51,030
  54,854
  58,829
  62,959
  67,252
  71,714
  74,889
  79,714
  84,736
  89,963
  95,408
  101,082
  106,998
  113,169
  119,608
  126,332
  133,355
  140,694
  148,366
  156,389
  164,783
  173,566
  182,760
  192,387
  202,469
  213,032
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
  37,152
  40,414
  43,813
  47,351
  51,030
  54,854
  58,829
  62,959
  67,252
  71,714
  74,889
  79,714
  84,736
  89,963
  95,408
  101,082
  106,998
  113,169
  119,608
  126,332
  133,355
  140,694
  148,366
  156,389
  164,783
  173,566
  182,760
  192,387
  202,469
  213,032
Operating income, $m
  8,051
  8,921
  9,827
  10,770
  11,751
  12,771
  13,831
  14,932
  16,076
  17,266
  19,967
  21,254
  22,592
  23,986
  25,438
  26,951
  28,528
  30,173
  31,890
  33,683
  35,555
  37,512
  39,558
  41,697
  43,935
  46,276
  48,728
  51,295
  53,983
  56,799
EBITDA, $m
  11,523
  12,576
  13,673
  14,816
  16,004
  17,238
  18,522
  19,855
  21,241
  22,682
  24,180
  25,738
  27,359
  29,047
  30,805
  32,637
  34,547
  36,540
  38,619
  40,790
  43,057
  45,427
  47,904
  50,495
  53,205
  56,040
  59,009
  62,117
  65,373
  68,783
Interest expense (income), $m
  385
  477
  691
  914
  1,146
  1,388
  1,639
  1,900
  2,172
  2,454
  2,747
  3,052
  3,369
  3,698
  4,041
  4,399
  4,770
  5,158
  5,562
  5,984
  6,424
  6,883
  7,363
  7,864
  8,388
  8,936
  9,509
  10,109
  10,737
  11,395
  12,084
Earnings before tax, $m
  7,574
  8,230
  8,913
  9,624
  10,363
  11,132
  11,930
  12,760
  13,622
  14,519
  16,915
  17,885
  18,894
  19,945
  21,039
  22,180
  23,370
  24,611
  25,907
  27,259
  28,673
  30,150
  31,694
  33,309
  34,999
  36,767
  38,619
  40,557
  42,588
  44,715
Tax expense, $m
  2,045
  2,222
  2,407
  2,599
  2,798
  3,006
  3,221
  3,445
  3,678
  3,920
  4,567
  4,829
  5,101
  5,385
  5,681
  5,989
  6,310
  6,645
  6,995
  7,360
  7,742
  8,140
  8,557
  8,993
  9,450
  9,927
  10,427
  10,950
  11,499
  12,073
Net income, $m
  5,529
  6,008
  6,507
  7,026
  7,565
  8,126
  8,709
  9,315
  9,944
  10,599
  12,348
  13,056
  13,793
  14,560
  15,359
  16,192
  17,060
  17,966
  18,912
  19,899
  20,931
  22,009
  23,136
  24,315
  25,549
  26,840
  28,192
  29,607
  31,089
  32,642

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
  58,859
  64,238
  69,844
  75,678
  81,746
  88,054
  94,609
  101,421
  108,500
  115,859
  123,510
  131,469
  139,750
  148,372
  157,352
  166,709
  176,466
  186,643
  197,264
  208,353
  219,936
  232,039
  244,692
  257,925
  271,767
  286,253
  301,416
  317,294
  333,922
  351,342
Adjusted assets (=assets-cash), $m
  58,859
  64,238
  69,844
  75,678
  81,746
  88,054
  94,609
  101,421
  108,500
  115,859
  123,510
  131,469
  139,750
  148,372
  157,352
  166,709
  176,466
  186,643
  197,264
  208,353
  219,936
  232,039
  244,692
  257,925
  271,767
  286,253
  301,416
  317,294
  333,922
  351,342
Revenue / Adjusted assets
  0.768
  0.768
  0.768
  0.768
  0.768
  0.768
  0.768
  0.768
  0.768
  0.768
  0.768
  0.768
  0.768
  0.768
  0.768
  0.768
  0.768
  0.768
  0.768
  0.768
  0.768
  0.768
  0.768
  0.768
  0.768
  0.768
  0.768
  0.768
  0.768
  0.768
Average production assets, $m
  35,937
  39,221
  42,644
  46,206
  49,911
  53,762
  57,764
  61,924
  66,246
  70,739
  75,410
  80,269
  85,326
  90,590
  96,073
  101,786
  107,743
  113,957
  120,441
  127,212
  134,284
  141,674
  149,399
  157,478
  165,930
  174,775
  184,033
  193,727
  203,879
  214,515
Working capital, $m
  -12,657
  -13,814
  -15,019
  -16,274
  -17,579
  -18,935
  -20,345
  -21,810
  -23,332
  -24,914
  -26,560
  -28,271
  -30,052
  -31,906
  -33,837
  -35,849
  -37,947
  -40,136
  -42,420
  -44,804
  -47,295
  -49,898
  -52,619
  -55,464
  -58,441
  -61,556
  -64,817
  -68,231
  -71,807
  -75,553
Total debt, $m
  12,798
  16,924
  21,223
  25,698
  30,352
  35,190
  40,218
  45,443
  50,873
  56,517
  62,385
  68,489
  74,841
  81,454
  88,342
  95,519
  103,002
  110,808
  118,954
  127,459
  136,344
  145,627
  155,332
  165,481
  176,098
  187,209
  198,839
  211,017
  223,771
  237,132
Total liabilities, $m
  45,145
  49,271
  53,570
  58,045
  62,699
  67,537
  72,565
  77,790
  83,220
  88,864
  94,732
  100,836
  107,188
  113,801
  120,689
  127,866
  135,349
  143,155
  151,301
  159,806
  168,691
  177,974
  187,679
  197,828
  208,445
  219,556
  231,186
  243,364
  256,118
  269,479
Total equity, $m
  13,714
  14,968
  16,274
  17,633
  19,047
  20,517
  22,044
  23,631
  25,281
  26,995
  28,778
  30,632
  32,562
  34,571
  36,663
  38,843
  41,117
  43,488
  45,962
  48,546
  51,245
  54,065
  57,013
  60,096
  63,322
  66,697
  70,230
  73,929
  77,804
  81,863
Total liabilities and equity, $m
  58,859
  64,239
  69,844
  75,678
  81,746
  88,054
  94,609
  101,421
  108,501
  115,859
  123,510
  131,468
  139,750
  148,372
  157,352
  166,709
  176,466
  186,643
  197,263
  208,352
  219,936
  232,039
  244,692
  257,924
  271,767
  286,253
  301,416
  317,293
  333,922
  351,342
Debt-to-equity ratio
  0.930
  1.130
  1.300
  1.460
  1.590
  1.720
  1.820
  1.920
  2.010
  2.090
  2.170
  2.240
  2.300
  2.360
  2.410
  2.460
  2.510
  2.550
  2.590
  2.630
  2.660
  2.690
  2.720
  2.750
  2.780
  2.810
  2.830
  2.850
  2.880
  2.900
Adjusted equity ratio
  0.233
  0.233
  0.233
  0.233
  0.233
  0.233
  0.233
  0.233
  0.233
  0.233
  0.233
  0.233
  0.233
  0.233
  0.233
  0.233
  0.233
  0.233
  0.233
  0.233
  0.233
  0.233
  0.233
  0.233
  0.233
  0.233
  0.233
  0.233
  0.233
  0.233

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  5,529
  6,008
  6,507
  7,026
  7,565
  8,126
  8,709
  9,315
  9,944
  10,599
  12,348
  13,056
  13,793
  14,560
  15,359
  16,192
  17,060
  17,966
  18,912
  19,899
  20,931
  22,009
  23,136
  24,315
  25,549
  26,840
  28,192
  29,607
  31,089
  32,642
Depreciation, amort., depletion, $m
  3,472
  3,655
  3,846
  4,045
  4,252
  4,468
  4,691
  4,924
  5,165
  5,416
  4,213
  4,484
  4,767
  5,061
  5,367
  5,686
  6,019
  6,366
  6,729
  7,107
  7,502
  7,915
  8,346
  8,798
  9,270
  9,764
  10,281
  10,823
  11,390
  11,984
Funds from operations, $m
  9,001
  9,663
  10,353
  11,071
  11,818
  12,594
  13,400
  14,238
  15,109
  16,015
  16,561
  17,540
  18,559
  19,621
  20,726
  21,878
  23,079
  24,332
  25,640
  27,006
  28,433
  29,924
  31,483
  33,113
  34,819
  36,604
  38,473
  40,430
  42,479
  44,626
Change in working capital, $m
  -1,109
  -1,157
  -1,205
  -1,255
  -1,305
  -1,356
  -1,410
  -1,465
  -1,522
  -1,582
  -1,645
  -1,711
  -1,781
  -1,854
  -1,931
  -2,012
  -2,098
  -2,188
  -2,284
  -2,385
  -2,491
  -2,603
  -2,721
  -2,845
  -2,977
  -3,115
  -3,261
  -3,414
  -3,576
  -3,746
Cash from operations, $m
  10,109
  10,820
  11,558
  12,326
  13,123
  13,950
  14,810
  15,703
  16,632
  17,597
  18,206
  19,252
  20,340
  21,475
  22,657
  23,890
  25,177
  26,521
  27,924
  29,391
  30,924
  32,527
  34,204
  35,959
  37,796
  39,719
  41,733
  43,844
  46,055
  48,372
Maintenance CAPEX, $m
  -1,832
  -2,008
  -2,191
  -2,382
  -2,581
  -2,788
  -3,003
  -3,227
  -3,459
  -3,701
  -3,952
  -4,213
  -4,484
  -4,767
  -5,061
  -5,367
  -5,686
  -6,019
  -6,366
  -6,729
  -7,107
  -7,502
  -7,915
  -8,346
  -8,798
  -9,270
  -9,764
  -10,281
  -10,823
  -11,390
New CAPEX, $m
  -3,148
  -3,285
  -3,422
  -3,562
  -3,705
  -3,851
  -4,002
  -4,159
  -4,322
  -4,493
  -4,672
  -4,859
  -5,056
  -5,264
  -5,483
  -5,714
  -5,957
  -6,214
  -6,485
  -6,770
  -7,072
  -7,390
  -7,725
  -8,079
  -8,452
  -8,844
  -9,258
  -9,694
  -10,153
  -10,636
Cash from investing activities, $m
  -4,980
  -5,293
  -5,613
  -5,944
  -6,286
  -6,639
  -7,005
  -7,386
  -7,781
  -8,194
  -8,624
  -9,072
  -9,540
  -10,031
  -10,544
  -11,081
  -11,643
  -12,233
  -12,851
  -13,499
  -14,179
  -14,892
  -15,640
  -16,425
  -17,250
  -18,114
  -19,022
  -19,975
  -20,976
  -22,026
Free cash flow, $m
  5,130
  5,528
  5,945
  6,381
  6,836
  7,311
  7,804
  8,317
  8,850
  9,403
  9,583
  10,180
  10,800
  11,444
  12,113
  12,810
  13,534
  14,288
  15,073
  15,892
  16,745
  17,635
  18,564
  19,533
  20,546
  21,605
  22,711
  23,869
  25,079
  26,347
Issuance/(repayment) of debt, $m
  3,964
  4,126
  4,299
  4,475
  4,654
  4,838
  5,028
  5,225
  5,430
  5,644
  5,868
  6,104
  6,352
  6,613
  6,888
  7,177
  7,483
  7,806
  8,146
  8,505
  8,884
  9,284
  9,705
  10,149
  10,617
  11,111
  11,630
  12,178
  12,754
  13,361
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  
  3,964
  4,126
  4,299
  4,475
  4,654
  4,838
  5,028
  5,225
  5,430
  5,644
  5,868
  6,104
  6,352
  6,613
  6,888
  7,177
  7,483
  7,806
  8,146
  8,505
  8,884
  9,284
  9,705
  10,149
  10,617
  11,111
  11,630
  12,178
  12,754
  13,361
Total cash flow (excl. dividends), $m
  9,093
  9,654
  10,244
  10,856
  11,491
  12,149
  12,832
  13,542
  14,280
  15,047
  15,451
  16,284
  17,151
  18,056
  19,001
  19,987
  21,017
  22,094
  23,219
  24,397
  25,629
  26,918
  28,268
  29,682
  31,163
  32,715
  34,342
  36,046
  37,833
  39,707
Retained Cash Flow (-), $m
  -1,184
  -1,253
  -1,306
  -1,359
  -1,414
  -1,470
  -1,527
  -1,587
  -1,649
  -1,715
  -1,783
  -1,854
  -1,930
  -2,009
  -2,092
  -2,180
  -2,273
  -2,371
  -2,475
  -2,584
  -2,699
  -2,820
  -2,948
  -3,083
  -3,225
  -3,375
  -3,533
  -3,699
  -3,874
  -4,059
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
  7,909
  8,400
  8,938
  9,497
  10,077
  10,679
  11,305
  11,955
  12,630
  13,333
  13,669
  14,429
  15,222
  16,048
  16,909
  17,807
  18,744
  19,723
  20,745
  21,813
  22,930
  24,098
  25,320
  26,599
  27,938
  29,340
  30,809
  32,347
  33,959
  35,649
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
  7,583
  7,690
  7,779
  7,820
  7,811
  7,750
  7,637
  7,472
  7,255
  6,990
  6,491
  6,158
  5,788
  5,387
  4,964
  4,525
  4,078
  3,632
  3,194
  2,772
  2,372
  2,000
  1,660
  1,355
  1,087
  856
  661
  500
  371
  268
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 0001 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 9.6% 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 79.5%.

Life of production assets of 17.9 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 -28%. 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 - $12530 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 691.331 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 $36.0 billion.

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COMPANY NEWS

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▶ Four names before the weekend   [02:25PM  CNBC Videos]
▶ Company News For Oct 12, 2018   [09:35AM  Zacks]
▶ Delta Air Lines, Inc. Earnings: A Big Step Forward   [Oct-11-18 08:35PM  Motley Fool]
▶ [$$] Delta Revenue Jumps, Helping Offset Fuel Costs   [07:40PM  The Wall Street Journal]
▶ What Happened in the Stock Market Today   [05:03PM  Motley Fool]
▶ [$$] Delta Revenue Jumps, Helping Offset Fuel Costs   [12:37PM  The Wall Street Journal]
▶ /C O R R E C T I O N -- Delta Air Lines/   [11:45AM  PR Newswire]
▶ Atlanta airport will continue normal operations, in light of Hurricane Michael   [Oct-10-18 01:46PM  American City Business Journals]
▶ 7 things to know today and Orlando named a top foodie-friendly city   [07:00AM  American City Business Journals]
▶ 5 Earnings Charts to Kick off Earnings Season   [Oct-08-18 06:28PM  Zacks]
▶ Southwest Airlines challenges Delta Air Lines in on-time derby   [03:09PM  American City Business Journals]
▶ PICTURES: First Delta A220-100 conducts maiden flight   [Oct-07-18 11:06PM  Flightglobal]
▶ Consultant: Atlanta could use second airport   [12:53PM  American City Business Journals]
▶ Brexit could cut make it tougher to get to Britain   [10:42AM  Yahoo Finance Video]
▶ Delta to offer free in-flight Wi-Fi eventually   [Oct-03-18 02:50PM  American City Business Journals]
▶ 7 Airline Stocks Losing Altitude   [11:44AM  InvestorPlace]
▶ Delta Air Lines Delivers a Solid Investor Update   [Oct-02-18 08:05PM  Motley Fool]
▶ Delta Air Lines partners with startup to improve pet air travel   [06:02PM  American City Business Journals]

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