Intrinsic value of United Continental Holdings - UAL

Previous Close

$91.98

  Intrinsic Value

$179.06

stock screener

  Rating & Target

str. buy

+95%

Previous close

$91.98

 
Intrinsic value

$179.06

 
Up/down potential

+95%

 
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 25.1

 

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, %
  7.70
  7.43
  7.19
  6.97
  6.77
  6.59
  6.43
  6.29
  6.16
  6.05
  5.94
  5.85
  5.76
  5.69
  5.62
  5.56
  5.50
  5.45
  5.41
  5.36
  5.33
  5.30
  5.27
  5.24
  5.22
  5.19
  5.17
  5.16
  5.14
  5.13
Revenue, $m
  40,642
  43,661
  46,799
  50,060
  53,450
  56,975
  60,641
  64,456
  68,428
  72,566
  76,877
  81,372
  86,061
  90,955
  96,065
  101,402
  106,979
  112,810
  118,908
  125,287
  131,962
  138,950
  146,267
  153,931
  161,959
  170,370
  179,186
  188,427
  198,114
  208,272
Variable operating expenses, $m
  35,743
  38,339
  41,037
  43,840
  46,754
  49,784
  52,936
  56,215
  59,630
  63,186
  66,086
  69,950
  73,981
  78,188
  82,581
  87,169
  91,963
  96,975
  102,217
  107,701
  113,439
  119,447
  125,737
  132,324
  139,225
  146,457
  154,035
  161,978
  170,306
  179,038
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
  35,743
  38,339
  41,037
  43,840
  46,754
  49,784
  52,936
  56,215
  59,630
  63,186
  66,086
  69,950
  73,981
  78,188
  82,581
  87,169
  91,963
  96,975
  102,217
  107,701
  113,439
  119,447
  125,737
  132,324
  139,225
  146,457
  154,035
  161,978
  170,306
  179,038
Operating income, $m
  4,898
  5,322
  5,763
  6,220
  6,696
  7,191
  7,706
  8,241
  8,799
  9,379
  10,791
  11,422
  12,080
  12,767
  13,484
  14,233
  15,016
  15,834
  16,690
  17,586
  18,523
  19,504
  20,531
  21,606
  22,733
  23,914
  25,151
  26,448
  27,808
  29,234
EBITDA, $m
  7,734
  8,309
  8,906
  9,526
  10,172
  10,842
  11,540
  12,266
  13,022
  13,809
  14,630
  15,485
  16,377
  17,309
  18,281
  19,297
  20,358
  21,468
  22,628
  23,842
  25,112
  26,442
  27,834
  29,293
  30,821
  32,421
  34,099
  35,857
  37,701
  39,634
Interest expense (income), $m
  584
  777
  918
  1,063
  1,214
  1,371
  1,534
  1,704
  1,880
  2,064
  2,255
  2,454
  2,662
  2,878
  3,103
  3,339
  3,585
  3,842
  4,110
  4,391
  4,684
  4,991
  5,312
  5,649
  6,001
  6,369
  6,756
  7,161
  7,585
  8,029
  8,496
Earnings before tax, $m
  4,121
  4,404
  4,700
  5,006
  5,325
  5,657
  6,002
  6,361
  6,735
  7,124
  8,337
  8,760
  9,202
  9,663
  10,145
  10,648
  11,174
  11,724
  12,300
  12,902
  13,532
  14,191
  14,882
  15,606
  16,364
  17,158
  17,991
  18,864
  19,779
  20,738
Tax expense, $m
  1,113
  1,189
  1,269
  1,352
  1,438
  1,527
  1,620
  1,717
  1,818
  1,924
  2,251
  2,365
  2,485
  2,609
  2,739
  2,875
  3,017
  3,166
  3,321
  3,483
  3,654
  3,832
  4,018
  4,214
  4,418
  4,633
  4,858
  5,093
  5,340
  5,599
Net income, $m
  3,009
  3,215
  3,431
  3,655
  3,887
  4,129
  4,381
  4,643
  4,916
  5,201
  6,086
  6,395
  6,718
  7,054
  7,406
  7,773
  8,157
  8,559
  8,979
  9,418
  9,878
  10,360
  10,864
  11,392
  11,946
  12,525
  13,133
  13,770
  14,438
  15,139

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
  45,614
  49,003
  52,524
  56,185
  59,989
  63,945
  68,060
  72,342
  76,799
  81,443
  86,282
  91,327
  96,590
  102,082
  107,817
  113,807
  120,066
  126,610
  133,454
  140,614
  148,106
  155,949
  164,161
  172,762
  181,772
  191,213
  201,107
  211,478
  222,351
  233,751
Adjusted assets (=assets-cash), $m
  45,614
  49,003
  52,524
  56,185
  59,989
  63,945
  68,060
  72,342
  76,799
  81,443
  86,282
  91,327
  96,590
  102,082
  107,817
  113,807
  120,066
  126,610
  133,454
  140,614
  148,106
  155,949
  164,161
  172,762
  181,772
  191,213
  201,107
  211,478
  222,351
  233,751
Revenue / Adjusted assets
  0.891
  0.891
  0.891
  0.891
  0.891
  0.891
  0.891
  0.891
  0.891
  0.891
  0.891
  0.891
  0.891
  0.891
  0.891
  0.891
  0.891
  0.891
  0.891
  0.891
  0.891
  0.891
  0.891
  0.891
  0.891
  0.891
  0.891
  0.891
  0.891
  0.891
Average production assets, $m
  31,050
  33,357
  35,755
  38,246
  40,836
  43,529
  46,330
  49,245
  52,279
  55,440
  58,734
  62,168
  65,751
  69,490
  73,393
  77,471
  81,732
  86,187
  90,845
  95,719
  100,819
  106,158
  111,748
  117,603
  123,736
  130,163
  136,898
  143,958
  151,359
  159,120
Working capital, $m
  -8,413
  -9,038
  -9,687
  -10,363
  -11,064
  -11,794
  -12,553
  -13,342
  -14,165
  -15,021
  -15,914
  -16,844
  -17,815
  -18,828
  -19,885
  -20,990
  -22,145
  -23,352
  -24,614
  -25,934
  -27,316
  -28,763
  -30,277
  -31,864
  -33,525
  -35,267
  -37,092
  -39,004
  -41,010
  -43,112
Total debt, $m
  16,997
  19,688
  22,484
  25,391
  28,411
  31,552
  34,819
  38,219
  41,759
  45,446
  49,288
  53,293
  57,472
  61,833
  66,386
  71,143
  76,113
  81,309
  86,743
  92,427
  98,376
  104,603
  111,124
  117,953
  125,107
  132,603
  140,459
  148,693
  157,326
  166,378
Total liabilities, $m
  36,217
  38,908
  41,704
  44,611
  47,631
  50,772
  54,039
  57,439
  60,979
  64,666
  68,508
  72,513
  76,692
  81,053
  85,606
  90,363
  95,333
  100,529
  105,963
  111,647
  117,596
  123,823
  130,344
  137,173
  144,327
  151,823
  159,679
  167,913
  176,546
  185,598
Total equity, $m
  9,396
  10,095
  10,820
  11,574
  12,358
  13,173
  14,020
  14,902
  15,821
  16,777
  17,774
  18,813
  19,897
  21,029
  22,210
  23,444
  24,734
  26,082
  27,492
  28,966
  30,510
  32,125
  33,817
  35,589
  37,445
  39,390
  41,428
  43,564
  45,804
  48,153
Total liabilities and equity, $m
  45,613
  49,003
  52,524
  56,185
  59,989
  63,945
  68,059
  72,341
  76,800
  81,443
  86,282
  91,326
  96,589
  102,082
  107,816
  113,807
  120,067
  126,611
  133,455
  140,613
  148,106
  155,948
  164,161
  172,762
  181,772
  191,213
  201,107
  211,477
  222,350
  233,751
Debt-to-equity ratio
  1.810
  1.950
  2.080
  2.190
  2.300
  2.400
  2.480
  2.560
  2.640
  2.710
  2.770
  2.830
  2.890
  2.940
  2.990
  3.030
  3.080
  3.120
  3.160
  3.190
  3.220
  3.260
  3.290
  3.310
  3.340
  3.370
  3.390
  3.410
  3.430
  3.460
Adjusted equity ratio
  0.206
  0.206
  0.206
  0.206
  0.206
  0.206
  0.206
  0.206
  0.206
  0.206
  0.206
  0.206
  0.206
  0.206
  0.206
  0.206
  0.206
  0.206
  0.206
  0.206
  0.206
  0.206
  0.206
  0.206
  0.206
  0.206
  0.206
  0.206
  0.206
  0.206

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  3,009
  3,215
  3,431
  3,655
  3,887
  4,129
  4,381
  4,643
  4,916
  5,201
  6,086
  6,395
  6,718
  7,054
  7,406
  7,773
  8,157
  8,559
  8,979
  9,418
  9,878
  10,360
  10,864
  11,392
  11,946
  12,525
  13,133
  13,770
  14,438
  15,139
Depreciation, amort., depletion, $m
  2,836
  2,986
  3,143
  3,306
  3,475
  3,651
  3,834
  4,025
  4,223
  4,430
  3,839
  4,063
  4,297
  4,542
  4,797
  5,063
  5,342
  5,633
  5,938
  6,256
  6,589
  6,938
  7,304
  7,686
  8,087
  8,507
  8,948
  9,409
  9,893
  10,400
Funds from operations, $m
  5,844
  6,202
  6,574
  6,961
  7,363
  7,781
  8,216
  8,668
  9,140
  9,631
  9,925
  10,458
  11,015
  11,596
  12,203
  12,837
  13,499
  14,192
  14,916
  15,674
  16,468
  17,298
  18,168
  19,079
  20,033
  21,033
  22,081
  23,179
  24,331
  25,539
Change in working capital, $m
  -601
  -625
  -650
  -675
  -702
  -730
  -759
  -790
  -822
  -856
  -892
  -931
  -971
  -1,013
  -1,058
  -1,105
  -1,155
  -1,207
  -1,262
  -1,320
  -1,382
  -1,447
  -1,515
  -1,586
  -1,662
  -1,741
  -1,825
  -1,913
  -2,005
  -2,103
Cash from operations, $m
  6,446
  6,827
  7,223
  7,636
  8,064
  8,510
  8,975
  9,458
  9,962
  10,487
  10,817
  11,389
  11,986
  12,609
  13,261
  13,942
  14,654
  15,399
  16,179
  16,995
  17,849
  18,745
  19,682
  20,665
  21,695
  22,774
  23,906
  25,092
  26,337
  27,642
Maintenance CAPEX, $m
  -1,883
  -2,029
  -2,180
  -2,337
  -2,500
  -2,669
  -2,845
  -3,028
  -3,219
  -3,417
  -3,624
  -3,839
  -4,063
  -4,297
  -4,542
  -4,797
  -5,063
  -5,342
  -5,633
  -5,938
  -6,256
  -6,589
  -6,938
  -7,304
  -7,686
  -8,087
  -8,507
  -8,948
  -9,409
  -9,893
New CAPEX, $m
  -2,233
  -2,307
  -2,397
  -2,491
  -2,590
  -2,693
  -2,801
  -2,915
  -3,035
  -3,161
  -3,294
  -3,434
  -3,582
  -3,739
  -3,904
  -4,078
  -4,261
  -4,455
  -4,659
  -4,874
  -5,100
  -5,339
  -5,590
  -5,855
  -6,133
  -6,427
  -6,735
  -7,060
  -7,401
  -7,760
Cash from investing activities, $m
  -4,116
  -4,336
  -4,577
  -4,828
  -5,090
  -5,362
  -5,646
  -5,943
  -6,254
  -6,578
  -6,918
  -7,273
  -7,645
  -8,036
  -8,446
  -8,875
  -9,324
  -9,797
  -10,292
  -10,812
  -11,356
  -11,928
  -12,528
  -13,159
  -13,819
  -14,514
  -15,242
  -16,008
  -16,810
  -17,653
Free cash flow, $m
  2,329
  2,490
  2,646
  2,807
  2,975
  3,148
  3,328
  3,515
  3,709
  3,909
  3,900
  4,116
  4,340
  4,573
  4,815
  5,067
  5,329
  5,602
  5,887
  6,184
  6,493
  6,816
  7,154
  7,506
  7,875
  8,260
  8,663
  9,085
  9,526
  9,988
Issuance/(repayment) of debt, $m
  2,605
  2,691
  2,796
  2,906
  3,021
  3,141
  3,267
  3,400
  3,540
  3,687
  3,842
  4,006
  4,179
  4,361
  4,553
  4,756
  4,970
  5,196
  5,434
  5,685
  5,949
  6,227
  6,520
  6,829
  7,154
  7,496
  7,856
  8,235
  8,633
  9,052
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  
  2,605
  2,691
  2,796
  2,906
  3,021
  3,141
  3,267
  3,400
  3,540
  3,687
  3,842
  4,006
  4,179
  4,361
  4,553
  4,756
  4,970
  5,196
  5,434
  5,685
  5,949
  6,227
  6,520
  6,829
  7,154
  7,496
  7,856
  8,235
  8,633
  9,052
Total cash flow (excl. dividends), $m
  4,934
  5,181
  5,442
  5,713
  5,996
  6,289
  6,596
  6,915
  7,248
  7,596
  7,742
  8,121
  8,518
  8,934
  9,368
  9,823
  10,299
  10,798
  11,321
  11,868
  12,442
  13,044
  13,674
  14,335
  15,029
  15,756
  16,519
  17,319
  18,159
  19,040
Retained Cash Flow (-), $m
  -662
  -698
  -725
  -754
  -784
  -815
  -848
  -882
  -918
  -957
  -997
  -1,039
  -1,084
  -1,131
  -1,181
  -1,234
  -1,290
  -1,348
  -1,410
  -1,475
  -1,543
  -1,616
  -1,692
  -1,772
  -1,856
  -1,945
  -2,038
  -2,136
  -2,240
  -2,348
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
  4,272
  4,483
  4,717
  4,959
  5,212
  5,474
  5,748
  6,033
  6,330
  6,639
  6,745
  7,082
  7,434
  7,802
  8,187
  8,589
  9,010
  9,450
  9,911
  10,393
  10,899
  11,428
  11,982
  12,564
  13,173
  13,811
  14,481
  15,183
  15,919
  16,692
Discount rate, %
  6.40
  6.72
  7.06
  7.41
  7.78
  8.17
  8.58
  9.01
  9.46
  9.93
  10.42
  10.95
  11.49
  12.07
  12.67
  13.31
  13.97
  14.67
  15.40
  16.17
  16.98
  17.83
  18.72
  19.66
  20.64
  21.67
  22.76
  23.89
  25.09
  26.34
PV of cash for distribution, $m
  4,015
  3,936
  3,844
  3,726
  3,584
  3,418
  3,231
  3,026
  2,807
  2,577
  2,266
  2,036
  1,807
  1,583
  1,367
  1,164
  976
  804
  652
  518
  405
  309
  231
  169
  121
  84
  57
  38
  24
  15
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 (UAL)

Valuation Ratios
P/E Ratio 12.8
Price to Sales 0.8
Price to Book 3.3
Price to Tangible Book
Price to Cash Flow 5.2
Price to Free Cash Flow 12.5
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 $37736 million for the last fiscal year's total revenue generated by United Continental Holdings. The default revenue input number comes from 0001 income statement of United Continental Holdings. 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 7.7% 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 6.4%, whose default value for UAL is calculated based on our internal credit rating of United Continental Holdings, 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.
    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 88.1%.

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.

Corporate tax rate of 27% is the nominal tax rate for United Continental Holdings. 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 76.4%.

Life of production assets of 15.3 years is the average useful life of capital assets used in United Continental Holdings 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 -20.7%. 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 - $8734 million for United Continental Holdings - 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 272.604 million for United Continental Holdings 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 at the current share price and the inputted number of shares is $25.1 billion.

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