Consider the following data for the airline industry for July 2018. Discuss the potential challenges of using
Question:
Consider the following data for the airline industry for July 2018. Discuss the potential challenges of using multiples to value an airline.
Problems 345 Source: CapitalIQ Company Name Market Capitalization Enterprise Value (EV) EV/Sales EV/EBITDA EV/EBIT P/E Forward P/E Alaska Air (ALK) 7,286 8,207 1.02x 5.1x 6.7x 7.7x 12.5x American Airlines (AAL) 17,879 37,327 0.87x 5.7x 8.2x 10.5x 8.2x Delta Air Lines (DAL) 35,580 44,164 1.02x 5.7x 8.0x 10.8x 8.8x Hawaiian (HA) 2,023 2,057 0.73x 3.4x 4.1x 5.8x 7.2x JetBlue Airways (JBLU) 5,450 5,814 0.80x 4.1x 5.9x 4.9x 10.8x SkyWest (SKYW) 2,909 5,040 1.56x 7.2x 12.6x 6.6x 11.8x Southwest Airlines (LUV) 30,318 30,691 1.44x 6.9x 8.9x 8.6x 12.3x United Continental (UAL) 21,961 31,393 0.80x 5.7x 9.2x 11.4x 9.3x AppendixLO1
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Corporate Finance The Core
ISBN: 9781292431611
5th Global Edition
Authors: Jonathan Berk, Peter DeMarzo