Intrinsic value of Hawaiian Holdings, Inc. - HA

Previous Close

$26.71

  Intrinsic Value

$151.67

stock screener

  Rating & Target

str. buy

+468%

Previous close

$26.71

 
Intrinsic value

$151.67

 
Up/down potential

+468%

 
Rating

str. buy

We calculate the intrinsic value of HA 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 1.3

 

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, %
  2.20
  2.48
  2.73
  2.96
  3.16
  3.35
  3.51
  3.66
  3.79
  3.92
  4.02
  4.12
  4.21
  4.29
  4.36
  4.42
  4.48
  4.53
  4.58
  4.62
  4.66
  4.69
  4.72
  4.75
  4.78
  4.80
  4.82
  4.84
  4.85
  4.87
Revenue, $m
  2,899
  2,971
  3,052
  3,143
  3,242
  3,351
  3,468
  3,595
  3,732
  3,878
  4,034
  4,200
  4,377
  4,565
  4,764
  4,974
  5,197
  5,433
  5,682
  5,944
  6,221
  6,513
  6,821
  7,145
  7,486
  7,846
  8,224
  8,622
  9,040
  9,480
Variable operating expenses, $m
  2,393
  2,447
  2,508
  2,576
  2,650
  2,731
  2,820
  2,915
  3,017
  3,127
  3,025
  3,150
  3,283
  3,423
  3,573
  3,731
  3,898
  4,075
  4,261
  4,458
  4,666
  4,885
  5,116
  5,359
  5,615
  5,884
  6,168
  6,466
  6,780
  7,110
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
  2,393
  2,447
  2,508
  2,576
  2,650
  2,731
  2,820
  2,915
  3,017
  3,127
  3,025
  3,150
  3,283
  3,423
  3,573
  3,731
  3,898
  4,075
  4,261
  4,458
  4,666
  4,885
  5,116
  5,359
  5,615
  5,884
  6,168
  6,466
  6,780
  7,110
Operating income, $m
  506
  524
  545
  567
  592
  619
  649
  680
  715
  751
  1,009
  1,050
  1,094
  1,141
  1,191
  1,244
  1,299
  1,358
  1,421
  1,486
  1,555
  1,628
  1,705
  1,786
  1,872
  1,962
  2,056
  2,156
  2,260
  2,370
EBITDA, $m
  864
  886
  910
  937
  967
  999
  1,034
  1,072
  1,112
  1,156
  1,203
  1,252
  1,305
  1,361
  1,420
  1,483
  1,549
  1,620
  1,694
  1,772
  1,855
  1,942
  2,033
  2,130
  2,232
  2,339
  2,452
  2,570
  2,695
  2,826
Interest expense (income), $m
  30
  38
  41
  44
  48
  51
  56
  60
  65
  71
  77
  83
  90
  97
  104
  112
  121
  130
  139
  149
  160
  171
  183
  196
  209
  223
  237
  253
  269
  286
  304
Earnings before tax, $m
  468
  483
  501
  520
  541
  564
  588
  615
  644
  674
  926
  961
  998
  1,037
  1,079
  1,123
  1,170
  1,219
  1,271
  1,326
  1,384
  1,445
  1,510
  1,578
  1,649
  1,724
  1,803
  1,887
  1,974
  2,066
Tax expense, $m
  126
  131
  135
  140
  146
  152
  159
  166
  174
  182
  250
  259
  269
  280
  291
  303
  316
  329
  343
  358
  374
  390
  408
  426
  445
  466
  487
  509
  533
  558
Net income, $m
  342
  353
  365
  379
  395
  411
  430
  449
  470
  492
  676
  701
  728
  757
  787
  820
  854
  890
  928
  968
  1,010
  1,055
  1,102
  1,152
  1,204
  1,259
  1,316
  1,377
  1,441
  1,508

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
  3,269
  3,350
  3,441
  3,543
  3,655
  3,778
  3,910
  4,053
  4,207
  4,372
  4,548
  4,735
  4,935
  5,146
  5,371
  5,608
  5,859
  6,125
  6,406
  6,702
  7,014
  7,343
  7,690
  8,055
  8,440
  8,845
  9,271
  9,720
  10,192
  10,688
Adjusted assets (=assets-cash), $m
  3,269
  3,350
  3,441
  3,543
  3,655
  3,778
  3,910
  4,053
  4,207
  4,372
  4,548
  4,735
  4,935
  5,146
  5,371
  5,608
  5,859
  6,125
  6,406
  6,702
  7,014
  7,343
  7,690
  8,055
  8,440
  8,845
  9,271
  9,720
  10,192
  10,688
Revenue / Adjusted assets
  0.887
  0.887
  0.887
  0.887
  0.887
  0.887
  0.887
  0.887
  0.887
  0.887
  0.887
  0.887
  0.887
  0.887
  0.887
  0.887
  0.887
  0.887
  0.887
  0.887
  0.887
  0.887
  0.887
  0.887
  0.887
  0.887
  0.887
  0.887
  0.887
  0.887
Average production assets, $m
  2,119
  2,172
  2,231
  2,297
  2,370
  2,449
  2,535
  2,628
  2,728
  2,835
  2,949
  3,070
  3,200
  3,337
  3,482
  3,636
  3,799
  3,971
  4,153
  4,345
  4,548
  4,761
  4,986
  5,223
  5,473
  5,735
  6,012
  6,302
  6,608
  6,930
Working capital, $m
  -716
  -734
  -754
  -776
  -801
  -828
  -857
  -888
  -922
  -958
  -996
  -1,037
  -1,081
  -1,127
  -1,177
  -1,229
  -1,284
  -1,342
  -1,403
  -1,468
  -1,537
  -1,609
  -1,685
  -1,765
  -1,849
  -1,938
  -2,031
  -2,130
  -2,233
  -2,342
Total debt, $m
  759
  816
  880
  952
  1,031
  1,117
  1,210
  1,311
  1,419
  1,535
  1,658
  1,790
  1,930
  2,079
  2,237
  2,404
  2,580
  2,767
  2,964
  3,172
  3,392
  3,623
  3,867
  4,124
  4,395
  4,679
  4,979
  5,294
  5,626
  5,975
Total liabilities, $m
  2,298
  2,355
  2,419
  2,491
  2,570
  2,656
  2,749
  2,850
  2,958
  3,073
  3,197
  3,329
  3,469
  3,618
  3,776
  3,943
  4,119
  4,306
  4,503
  4,711
  4,931
  5,162
  5,406
  5,663
  5,933
  6,218
  6,518
  6,833
  7,165
  7,514
Total equity, $m
  971
  995
  1,022
  1,052
  1,086
  1,122
  1,161
  1,204
  1,250
  1,298
  1,351
  1,406
  1,466
  1,528
  1,595
  1,666
  1,740
  1,819
  1,902
  1,990
  2,083
  2,181
  2,284
  2,392
  2,507
  2,627
  2,754
  2,887
  3,027
  3,174
Total liabilities and equity, $m
  3,269
  3,350
  3,441
  3,543
  3,656
  3,778
  3,910
  4,054
  4,208
  4,371
  4,548
  4,735
  4,935
  5,146
  5,371
  5,609
  5,859
  6,125
  6,405
  6,701
  7,014
  7,343
  7,690
  8,055
  8,440
  8,845
  9,272
  9,720
  10,192
  10,688
Debt-to-equity ratio
  0.780
  0.820
  0.860
  0.900
  0.950
  1.000
  1.040
  1.090
  1.140
  1.180
  1.230
  1.270
  1.320
  1.360
  1.400
  1.440
  1.480
  1.520
  1.560
  1.590
  1.630
  1.660
  1.690
  1.720
  1.750
  1.780
  1.810
  1.830
  1.860
  1.880
Adjusted equity ratio
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  342
  353
  365
  379
  395
  411
  430
  449
  470
  492
  676
  701
  728
  757
  787
  820
  854
  890
  928
  968
  1,010
  1,055
  1,102
  1,152
  1,204
  1,259
  1,316
  1,377
  1,441
  1,508
Depreciation, amort., depletion, $m
  358
  361
  365
  370
  374
  380
  385
  391
  398
  405
  194
  202
  210
  220
  229
  239
  250
  261
  273
  286
  299
  313
  328
  344
  360
  377
  396
  415
  435
  456
Funds from operations, $m
  700
  714
  731
  749
  769
  791
  815
  840
  868
  897
  870
  903
  939
  977
  1,017
  1,059
  1,104
  1,151
  1,201
  1,254
  1,310
  1,368
  1,430
  1,495
  1,564
  1,636
  1,712
  1,792
  1,876
  1,964
Change in working capital, $m
  -15
  -18
  -20
  -22
  -25
  -27
  -29
  -31
  -34
  -36
  -39
  -41
  -44
  -46
  -49
  -52
  -55
  -58
  -61
  -65
  -68
  -72
  -76
  -80
  -84
  -89
  -93
  -98
  -103
  -109
Cash from operations, $m
  715
  732
  751
  771
  794
  818
  844
  872
  902
  933
  908
  944
  982
  1,023
  1,066
  1,111
  1,159
  1,209
  1,263
  1,319
  1,378
  1,440
  1,506
  1,575
  1,648
  1,725
  1,805
  1,890
  1,979
  2,073
Maintenance CAPEX, $m
  -136
  -139
  -143
  -147
  -151
  -156
  -161
  -167
  -173
  -179
  -186
  -194
  -202
  -210
  -220
  -229
  -239
  -250
  -261
  -273
  -286
  -299
  -313
  -328
  -344
  -360
  -377
  -396
  -415
  -435
New CAPEX, $m
  -45
  -53
  -59
  -66
  -73
  -79
  -86
  -93
  -100
  -107
  -114
  -122
  -129
  -137
  -145
  -154
  -163
  -172
  -182
  -192
  -202
  -213
  -225
  -237
  -249
  -263
  -276
  -291
  -306
  -322
Cash from investing activities, $m
  -181
  -192
  -202
  -213
  -224
  -235
  -247
  -260
  -273
  -286
  -300
  -316
  -331
  -347
  -365
  -383
  -402
  -422
  -443
  -465
  -488
  -512
  -538
  -565
  -593
  -623
  -653
  -687
  -721
  -757
Free cash flow, $m
  533
  540
  549
  559
  570
  583
  597
  612
  629
  647
  608
  629
  651
  675
  701
  728
  757
  787
  819
  854
  890
  928
  968
  1,010
  1,055
  1,102
  1,152
  1,204
  1,259
  1,317
Issuance/(repayment) of debt, $m
  49
  57
  64
  72
  79
  86
  93
  101
  108
  116
  124
  132
  140
  149
  158
  167
  177
  187
  197
  208
  220
  231
  244
  257
  270
  285
  300
  315
  332
  349
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  
  49
  57
  64
  72
  79
  86
  93
  101
  108
  116
  124
  132
  140
  149
  158
  167
  177
  187
  197
  208
  220
  231
  244
  257
  270
  285
  300
  315
  332
  349
Total cash flow (excl. dividends), $m
  583
  597
  613
  630
  649
  669
  690
  713
  737
  763
  731
  761
  791
  824
  858
  895
  933
  974
  1,017
  1,062
  1,109
  1,159
  1,212
  1,267
  1,326
  1,387
  1,451
  1,519
  1,590
  1,665
Retained Cash Flow (-), $m
  -23
  -24
  -27
  -30
  -33
  -36
  -39
  -43
  -46
  -49
  -52
  -56
  -59
  -63
  -67
  -71
  -75
  -79
  -83
  -88
  -93
  -98
  -103
  -109
  -114
  -120
  -127
  -133
  -140
  -147
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
  560
  573
  586
  600
  615
  632
  651
  670
  691
  714
  679
  705
  732
  761
  792
  824
  859
  895
  933
  974
  1,016
  1,061
  1,109
  1,159
  1,211
  1,267
  1,325
  1,386
  1,450
  1,518
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
  537
  525
  510
  494
  477
  459
  440
  419
  397
  374
  323
  301
  278
  256
  232
  209
  187
  165
  144
  124
  105
  88
  73
  59
  47
  37
  28
  21
  16
  11
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

Hawaiian Holdings, Inc. is a holding company. The Company is engaged in the scheduled air transportation of passengers and cargo amongst the Hawaiian Islands (the Neighbor Island routes), between the Hawaiian Islands and certain cities in the United States (the North America routes), and between the Hawaiian Islands and the South Pacific, Australia, New Zealand and Asia (the International routes), collectively referred to as its Scheduled Operations. It offers non-stop service to Hawai'i from United States gateway cities. As of December 31, 2016, it also provided approximately 160 daily flights between the Hawaiian Islands. The Company operates various charter flights. As of December 31, 2016, the Company's fleet consisted of 20 Boeing 717-200 aircraft for the Neighbor Island routes, eight Boeing 767-300 aircraft, and 23 Airbus A330-200 aircraft for the North America, International, and charter routes.

FINANCIAL RATIOS  of  Hawaiian Holdings, Inc. (HA)

Valuation Ratios
P/E Ratio 6.1
Price to Sales 0.6
Price to Book 2.1
Price to Tangible Book
Price to Cash Flow 3.4
Price to Free Cash Flow 6
Growth Rates
Sales Growth Rate 5.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 50.4%
Cap. Spend. - 3 Yr. Gr. Rate -12.1%
Financial Strength
Quick Ratio 10
Current Ratio 0
LT Debt to Equity 73.2%
Total Debt to Equity 81.9%
Interest Coverage 14
Management Effectiveness
Return On Assets 9.8%
Ret/ On Assets - 3 Yr. Avg. 7.3%
Return On Total Capital 19.3%
Ret/ On T. Cap. - 3 Yr. Avg. 12.9%
Return On Equity 41.7%
Return On Equity - 3 Yr. Avg. 34.9%
Asset Turnover 0.9
Profitability Ratios
Gross Margin 35.3%
Gross Margin - 3 Yr. Avg. 31.8%
EBITDA Margin 21.1%
EBITDA Margin - 3 Yr. Avg. 17.1%
Operating Margin 15.7%
Oper. Margin - 3 Yr. Avg. 14.7%
Pre-Tax Margin 15.5%
Pre-Tax Margin - 3 Yr. Avg. 11%
Net Profit Margin 9.6%
Net Profit Margin - 3 Yr. Avg. 6.8%
Effective Tax Rate 38%
Eff/ Tax Rate - 3 Yr. Avg. 38.4%
Payout Ratio 0%

HA stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the HA stock intrinsic value calculation we used $2837 million for the last fiscal year's total revenue generated by Hawaiian Holdings, Inc.. The default revenue input number comes from 0001 income statement of Hawaiian Holdings, 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 HA stock valuation model: a) initial revenue growth rate of 2.2% 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 HA is calculated based on our internal credit rating of Hawaiian Holdings, 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 Hawaiian Holdings, 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 HA stock the variable cost ratio is equal to 82.7%.

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 HA 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 Hawaiian Holdings, Inc..

Corporate tax rate of 27% is the nominal tax rate for Hawaiian Holdings, 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 HA 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 HA are equal to 73.1%.

Life of production assets of 15.2 years is the average useful life of capital assets used in Hawaiian Holdings, 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 HA is equal to -24.7%. 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 - $947.994 million for Hawaiian Holdings, 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 48.518 million for Hawaiian Holdings, 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 Hawaiian Holdings, Inc. at the current share price and the inputted number of shares is $1.3 billion.

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