Intrinsic value of United Continental Holdings, Inc. - UAL

Previous Close

$79.63

  Intrinsic Value

$235.53

stock screener

  Rating & Target

str. buy

+196%

Previous close

$79.63

 
Intrinsic value

$235.53

 
Up/down potential

+196%

 
Rating

str. buy

We calculate the intrinsic value of UAL 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 21.2

 

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, %
  11.00
  10.40
  9.86
  9.37
  8.94
  8.54
  8.19
  7.87
  7.58
  7.32
  7.09
  6.88
  6.69
  6.53
  6.37
  6.24
  6.11
  6.00
  5.90
  5.81
  5.73
  5.66
  5.59
  5.53
  5.48
  5.43
  5.39
  5.35
  5.31
  5.28
Revenue, $m
  45,846
  50,614
  55,605
  60,817
  66,252
  71,912
  77,801
  83,924
  90,287
  96,901
  103,773
  110,915
  118,341
  126,062
  134,096
  142,457
  151,164
  160,235
  169,690
  179,549
  189,837
  200,575
  211,789
  223,504
  235,749
  248,552
  261,943
  275,954
  290,619
  305,971
Variable operating expenses, $m
  41,315
  45,532
  49,945
  54,555
  59,362
  64,367
  69,575
  74,990
  80,618
  86,467
  91,777
  98,094
  104,661
  111,490
  118,595
  125,989
  133,690
  141,712
  150,074
  158,794
  167,892
  177,388
  187,306
  197,667
  208,497
  219,820
  231,663
  244,054
  257,023
  270,601
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
  41,315
  45,532
  49,945
  54,555
  59,362
  64,367
  69,575
  74,990
  80,618
  86,467
  91,777
  98,094
  104,661
  111,490
  118,595
  125,989
  133,690
  141,712
  150,074
  158,794
  167,892
  177,388
  187,306
  197,667
  208,497
  219,820
  231,663
  244,054
  257,023
  270,601
Operating income, $m
  4,532
  5,083
  5,660
  6,262
  6,891
  7,545
  8,226
  8,933
  9,669
  10,433
  11,996
  12,822
  13,680
  14,573
  15,501
  16,468
  17,474
  18,523
  19,616
  20,756
  21,945
  23,186
  24,483
  25,837
  27,252
  28,732
  30,280
  31,900
  33,595
  35,370
EBITDA, $m
  7,507
  8,288
  9,105
  9,959
  10,849
  11,776
  12,740
  13,743
  14,785
  15,868
  16,993
  18,163
  19,379
  20,643
  21,958
  23,328
  24,753
  26,239
  27,787
  29,402
  31,086
  32,845
  34,681
  36,599
  38,604
  40,701
  42,894
  45,188
  47,589
  50,103
Interest expense (income), $m
  584
  795
  1,003
  1,220
  1,447
  1,684
  1,931
  2,189
  2,457
  2,735
  3,025
  3,326
  3,639
  3,964
  4,302
  4,653
  5,019
  5,399
  5,795
  6,208
  6,638
  7,087
  7,555
  8,044
  8,554
  9,087
  9,645
  10,227
  10,837
  11,474
  12,142
Earnings before tax, $m
  3,736
  4,080
  4,440
  4,816
  5,207
  5,614
  6,037
  6,476
  6,934
  7,408
  8,670
  9,183
  9,716
  10,271
  10,848
  11,449
  12,075
  12,728
  13,408
  14,117
  14,858
  15,631
  16,439
  17,283
  18,165
  19,088
  20,053
  21,063
  22,121
  23,228
Tax expense, $m
  1,009
  1,102
  1,199
  1,300
  1,406
  1,516
  1,630
  1,749
  1,872
  2,000
  2,341
  2,479
  2,623
  2,773
  2,929
  3,091
  3,260
  3,436
  3,620
  3,812
  4,012
  4,220
  4,438
  4,666
  4,905
  5,154
  5,414
  5,687
  5,973
  6,272
Net income, $m
  2,727
  2,979
  3,241
  3,515
  3,801
  4,098
  4,407
  4,728
  5,061
  5,408
  6,329
  6,704
  7,093
  7,498
  7,919
  8,358
  8,815
  9,291
  9,788
  10,306
  10,846
  11,411
  12,000
  12,616
  13,260
  13,934
  14,639
  15,376
  16,148
  16,957

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
  49,725
  54,896
  60,309
  65,962
  71,857
  77,996
  84,383
  91,023
  97,926
  105,098
  112,552
  120,299
  128,352
  136,727
  145,440
  154,509
  163,952
  173,790
  184,045
  194,739
  205,897
  217,543
  229,706
  242,412
  255,693
  269,579
  284,103
  299,300
  315,205
  331,856
Adjusted assets (=assets-cash), $m
  49,725
  54,896
  60,309
  65,962
  71,857
  77,996
  84,383
  91,023
  97,926
  105,098
  112,552
  120,299
  128,352
  136,727
  145,440
  154,509
  163,952
  173,790
  184,045
  194,739
  205,897
  217,543
  229,706
  242,412
  255,693
  269,579
  284,103
  299,300
  315,205
  331,856
Revenue / Adjusted assets
  0.922
  0.922
  0.922
  0.922
  0.922
  0.922
  0.922
  0.922
  0.922
  0.922
  0.922
  0.922
  0.922
  0.922
  0.922
  0.922
  0.922
  0.922
  0.922
  0.922
  0.922
  0.922
  0.922
  0.922
  0.922
  0.922
  0.922
  0.922
  0.922
  0.922
Average production assets, $m
  34,660
  38,264
  42,037
  45,978
  50,087
  54,366
  58,817
  63,446
  68,257
  73,257
  78,452
  83,852
  89,465
  95,303
  101,377
  107,698
  114,280
  121,138
  128,285
  135,739
  143,516
  151,635
  160,112
  168,969
  178,226
  187,905
  198,029
  208,621
  219,708
  231,314
Working capital, $m
  -9,628
  -10,629
  -11,677
  -12,772
  -13,913
  -15,102
  -16,338
  -17,624
  -18,960
  -20,349
  -21,792
  -23,292
  -24,852
  -26,473
  -28,160
  -29,916
  -31,744
  -33,649
  -35,635
  -37,705
  -39,866
  -42,121
  -44,476
  -46,936
  -49,507
  -52,196
  -55,008
  -57,950
  -61,030
  -64,254
Total debt, $m
  18,567
  22,585
  26,791
  31,184
  35,764
  40,534
  45,496
  50,656
  56,019
  61,592
  67,384
  73,403
  79,661
  86,168
  92,938
  99,984
  107,322
  114,966
  122,934
  131,243
  139,913
  148,962
  158,412
  168,285
  178,605
  189,394
  200,679
  212,487
  224,845
  237,783
Total liabilities, $m
  38,636
  42,654
  46,860
  51,253
  55,833
  60,603
  65,565
  70,725
  76,088
  81,661
  87,453
  93,472
  99,730
  106,237
  113,007
  120,053
  127,391
  135,035
  143,003
  151,312
  159,982
  169,031
  178,481
  188,354
  198,674
  209,463
  220,748
  232,556
  244,914
  257,852
Total equity, $m
  11,089
  12,242
  13,449
  14,710
  16,024
  17,393
  18,817
  20,298
  21,837
  23,437
  25,099
  26,827
  28,623
  30,490
  32,433
  34,456
  36,561
  38,755
  41,042
  43,427
  45,915
  48,512
  51,224
  54,058
  57,020
  60,116
  63,355
  66,744
  70,291
  74,004
Total liabilities and equity, $m
  49,725
  54,896
  60,309
  65,963
  71,857
  77,996
  84,382
  91,023
  97,925
  105,098
  112,552
  120,299
  128,353
  136,727
  145,440
  154,509
  163,952
  173,790
  184,045
  194,739
  205,897
  217,543
  229,705
  242,412
  255,694
  269,579
  284,103
  299,300
  315,205
  331,856
Debt-to-equity ratio
  1.670
  1.840
  1.990
  2.120
  2.230
  2.330
  2.420
  2.500
  2.570
  2.630
  2.680
  2.740
  2.780
  2.830
  2.870
  2.900
  2.940
  2.970
  3.000
  3.020
  3.050
  3.070
  3.090
  3.110
  3.130
  3.150
  3.170
  3.180
  3.200
  3.210
Adjusted equity ratio
  0.223
  0.223
  0.223
  0.223
  0.223
  0.223
  0.223
  0.223
  0.223
  0.223
  0.223
  0.223
  0.223
  0.223
  0.223
  0.223
  0.223
  0.223
  0.223
  0.223
  0.223
  0.223
  0.223
  0.223
  0.223
  0.223
  0.223
  0.223
  0.223
  0.223

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  2,727
  2,979
  3,241
  3,515
  3,801
  4,098
  4,407
  4,728
  5,061
  5,408
  6,329
  6,704
  7,093
  7,498
  7,919
  8,358
  8,815
  9,291
  9,788
  10,306
  10,846
  11,411
  12,000
  12,616
  13,260
  13,934
  14,639
  15,376
  16,148
  16,957
Depreciation, amort., depletion, $m
  2,976
  3,205
  3,446
  3,697
  3,958
  4,231
  4,515
  4,809
  5,116
  5,434
  4,997
  5,341
  5,698
  6,070
  6,457
  6,860
  7,279
  7,716
  8,171
  8,646
  9,141
  9,658
  10,198
  10,762
  11,352
  11,968
  12,613
  13,288
  13,994
  14,733
Funds from operations, $m
  5,703
  6,184
  6,687
  7,212
  7,759
  8,329
  8,921
  9,537
  10,177
  10,842
  11,326
  12,044
  12,791
  13,568
  14,376
  15,218
  16,094
  17,007
  17,959
  18,951
  19,987
  21,069
  22,198
  23,379
  24,612
  25,903
  27,252
  28,664
  30,142
  31,690
Change in working capital, $m
  -954
  -1,001
  -1,048
  -1,095
  -1,141
  -1,189
  -1,237
  -1,286
  -1,336
  -1,389
  -1,443
  -1,500
  -1,559
  -1,622
  -1,687
  -1,756
  -1,828
  -1,905
  -1,986
  -2,071
  -2,160
  -2,255
  -2,355
  -2,460
  -2,571
  -2,689
  -2,812
  -2,942
  -3,079
  -3,224
Cash from operations, $m
  6,657
  7,185
  7,735
  8,307
  8,901
  9,517
  10,158
  10,823
  11,514
  12,231
  12,769
  13,544
  14,351
  15,190
  16,063
  16,974
  17,922
  18,912
  19,944
  21,022
  22,148
  23,324
  24,553
  25,839
  27,184
  28,591
  30,064
  31,607
  33,222
  34,914
Maintenance CAPEX, $m
  -1,988
  -2,208
  -2,437
  -2,678
  -2,929
  -3,190
  -3,463
  -3,746
  -4,041
  -4,348
  -4,666
  -4,997
  -5,341
  -5,698
  -6,070
  -6,457
  -6,860
  -7,279
  -7,716
  -8,171
  -8,646
  -9,141
  -9,658
  -10,198
  -10,762
  -11,352
  -11,968
  -12,613
  -13,288
  -13,994
New CAPEX, $m
  -3,455
  -3,605
  -3,773
  -3,941
  -4,109
  -4,279
  -4,452
  -4,629
  -4,811
  -5,000
  -5,195
  -5,400
  -5,614
  -5,838
  -6,073
  -6,321
  -6,582
  -6,858
  -7,148
  -7,454
  -7,777
  -8,118
  -8,478
  -8,857
  -9,257
  -9,679
  -10,124
  -10,592
  -11,086
  -11,606
Cash from investing activities, $m
  -5,443
  -5,813
  -6,210
  -6,619
  -7,038
  -7,469
  -7,915
  -8,375
  -8,852
  -9,348
  -9,861
  -10,397
  -10,955
  -11,536
  -12,143
  -12,778
  -13,442
  -14,137
  -14,864
  -15,625
  -16,423
  -17,259
  -18,136
  -19,055
  -20,019
  -21,031
  -22,092
  -23,205
  -24,374
  -25,600
Free cash flow, $m
  1,215
  1,373
  1,525
  1,689
  1,863
  2,048
  2,243
  2,448
  2,661
  2,884
  2,908
  3,148
  3,396
  3,654
  3,920
  4,195
  4,480
  4,775
  5,081
  5,397
  5,725
  6,065
  6,417
  6,784
  7,164
  7,560
  7,972
  8,401
  8,848
  9,314
Issuance/(repayment) of debt, $m
  3,839
  4,018
  4,206
  4,393
  4,580
  4,770
  4,963
  5,160
  5,363
  5,573
  5,791
  6,019
  6,258
  6,507
  6,770
  7,046
  7,337
  7,644
  7,968
  8,309
  8,669
  9,049
  9,450
  9,873
  10,319
  10,789
  11,285
  11,808
  12,358
  12,938
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  
  3,839
  4,018
  4,206
  4,393
  4,580
  4,770
  4,963
  5,160
  5,363
  5,573
  5,791
  6,019
  6,258
  6,507
  6,770
  7,046
  7,337
  7,644
  7,968
  8,309
  8,669
  9,049
  9,450
  9,873
  10,319
  10,789
  11,285
  11,808
  12,358
  12,938
Total cash flow (excl. dividends), $m
  5,054
  5,391
  5,731
  6,081
  6,443
  6,818
  7,206
  7,608
  8,024
  8,457
  8,699
  9,167
  9,654
  10,161
  10,690
  11,242
  11,818
  12,420
  13,049
  13,706
  14,394
  15,114
  15,868
  16,657
  17,484
  18,350
  19,257
  20,209
  21,206
  22,251
Retained Cash Flow (-), $m
  -1,094
  -1,153
  -1,207
  -1,261
  -1,315
  -1,369
  -1,424
  -1,481
  -1,539
  -1,599
  -1,662
  -1,728
  -1,796
  -1,868
  -1,943
  -2,022
  -2,106
  -2,194
  -2,287
  -2,385
  -2,488
  -2,597
  -2,712
  -2,834
  -2,962
  -3,097
  -3,239
  -3,389
  -3,547
  -3,713
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
  3,960
  4,238
  4,524
  4,821
  5,129
  5,449
  5,782
  6,127
  6,485
  6,858
  7,037
  7,439
  7,858
  8,293
  8,747
  9,219
  9,712
  10,226
  10,762
  11,321
  11,906
  12,517
  13,155
  13,823
  14,522
  15,253
  16,018
  16,820
  17,659
  18,538
Discount rate, %
  4.80
  5.04
  5.29
  5.56
  5.83
  6.13
  6.43
  6.75
  7.09
  7.45
  7.82
  8.21
  8.62
  9.05
  9.50
  9.98
  10.48
  11.00
  11.55
  12.13
  12.74
  13.37
  14.04
  14.74
  15.48
  16.25
  17.07
  17.92
  18.82
  19.76
PV of cash for distribution, $m
  3,779
  3,841
  3,875
  3,883
  3,863
  3,814
  3,737
  3,632
  3,500
  3,344
  3,074
  2,886
  2,682
  2,466
  2,241
  2,013
  1,785
  1,562
  1,348
  1,147
  960
  791
  641
  510
  397
  304
  227
  166
  119
  83
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

United Continental Holdings, Inc. (UAL) is a holding company and its principal subsidiary is United Air Lines, Inc. (United). The Company transports people and cargo through its mainline operations. It has global air rights in North America, Asia-Pacific, Europe, Middle East, Africa and Latin America. The Company, through United and its regional carriers, operates flights from its hubs at Newark Liberty International Airport (Newark Liberty), Chicago O'Hare International Airport (Chicago O'Hare), Denver International Airport (Denver), George Bush Intercontinental Airport (Houston Bush), Los Angeles International Airport (LAX), A.B. Won Pat International Airport (Guam), San Francisco International Airport (SFO) and Washington Dulles International Airport (Washington Dulles). It has contractual relationships with regional carriers to provide regional jet and turboprop service branded as United Express. These regional operations are an extension of the Company's mainline network.

FINANCIAL RATIOS  of  United Continental Holdings, Inc. (UAL)

Valuation Ratios
P/E Ratio 11.1
Price to Sales 0.7
Price to Book 2.9
Price to Tangible Book
Price to Cash Flow 4.5
Price to Free Cash Flow 10.8
Growth Rates
Sales Growth Rate -3.5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 17.3%
Cap. Spend. - 3 Yr. Gr. Rate 8.3%
Financial Strength
Quick Ratio 5
Current Ratio 0
LT Debt to Equity 124%
Total Debt to Equity 135.2%
Interest Coverage 8
Management Effectiveness
Return On Assets 6.5%
Ret/ On Assets - 3 Yr. Avg. 10.8%
Return On Total Capital 11%
Ret/ On T. Cap. - 3 Yr. Avg. 20.2%
Return On Equity 25.7%
Return On Equity - 3 Yr. Avg. 65.7%
Asset Turnover 0.9
Profitability Ratios
Gross Margin 28.4%
Gross Margin - 3 Yr. Avg. 25.6%
EBITDA Margin 17.5%
EBITDA Margin - 3 Yr. Avg. 14.8%
Operating Margin 11.9%
Oper. Margin - 3 Yr. Avg. 10.5%
Pre-Tax Margin 10.4%
Pre-Tax Margin - 3 Yr. Avg. 8.2%
Net Profit Margin 6.2%
Net Profit Margin - 3 Yr. Avg. 9.5%
Effective Tax Rate 36%
Eff/ Tax Rate - 3 Yr. Avg. 12%
Payout Ratio 0%

UAL stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the UAL stock intrinsic value calculation we used $41303 million for the last fiscal year's total revenue generated by United Continental Holdings, Inc.. The default revenue input number comes from 0001 income statement of United Continental 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 UAL stock valuation model: a) initial revenue growth rate of 11% 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 4.8%, whose default value for UAL is calculated based on our internal credit rating of United Continental 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 United Continental 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 UAL stock the variable cost ratio is equal to 90.3%.

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 UAL 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 United Continental Holdings, Inc..

Corporate tax rate of 27% is the nominal tax rate for United Continental 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 UAL 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 UAL are equal to 75.6%.

Life of production assets of 15.7 years is the average useful life of capital assets used in United Continental 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 UAL is equal to -21%. 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 - $9995 million for United Continental 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 266.740 million for United Continental 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 United Continental Holdings, Inc. at the current share price and the inputted number of shares is $21.2 billion.

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