Consider the following data for the airline industry for July 2018 (EV = enterprise value, Book = equity book value). Suppose Alaska Air (ALK) has 123 million shares outstanding. Estimate Alaska Air's share value using each of the five valuation multiples, based on the median valuation multiple of the other seven airlines shown. Calculate Alaska Air's share values using each of the five valuation multiples below: (Round the median to two decimal places. Round the share price to the nearest cent. Round the EV and market cap to the nearest integer.) EV/Sales EV/EBITDA EV/EBIT P/E FWD P/E Alaska Air 1.02 5.1 - 6.7 7.7 12.5 Median A A A Implied EV Implied market cap Implied share price A A A A A A Data Table (Click on the following icon in order to copy its contents into a spreadsheet.) Market Capitalization 7,286 Enterprise Value (EV) 8,207 EVIEBIT Tot EV/Sales 1.02x EV/EBITDA 5.1x P/E 7.7x Forward P/E 12.5x 6.7x Company Name Alaska Air (ALK) Peer Data American Airlines (AAL) Delta Air Lines (DAL) Hawaiian (HA) JetBlue Airways (JBLU) SkyWest (SKYW) Southwest Airlines (LUV) United Continental (UAL) Source: Capital Q 17,879 35,580 2,023 5,450 2,909 30,318 21,961 37,327 44,164 2,057 5,814 5,040 30,691 31,393 0.87x 1.02x 0.73x 0.80x 1.56x 1.44x 0.80x 5.7x 5.7x 3.4x 4.1x 7.2x 6.9x 5.7x 8.2x 8.0x 4.1x 5.9x 12.6x 8.9x 9.2x 10.5x 10.8x 5.8x 4.9x 6.6x 8.6x 11.4x 8.2x 8.8x 7.2x 10.8x 11.8% 12.3x 9.3x Print Done Consider the following data for the airline industry for July 2018 (EV = enterprise value, Book = equity book value). Suppose Alaska Air (ALK) has 123 million shares outstanding. Estimate Alaska Air's share value using each of the five valuation multiples, based on the median valuation multiple of the other seven airlines shown. Calculate Alaska Air's share values using each of the five valuation multiples below: (Round the median to two decimal places. Round the share price to the nearest cent. Round the EV and market cap to the nearest integer.) EV/Sales EV/EBITDA EV/EBIT P/E FWD P/E Alaska Air 1.02 5.1 - 6.7 7.7 12.5 Median A A A Implied EV Implied market cap Implied share price A A A A A A Data Table (Click on the following icon in order to copy its contents into a spreadsheet.) Market Capitalization 7,286 Enterprise Value (EV) 8,207 EVIEBIT Tot EV/Sales 1.02x EV/EBITDA 5.1x P/E 7.7x Forward P/E 12.5x 6.7x Company Name Alaska Air (ALK) Peer Data American Airlines (AAL) Delta Air Lines (DAL) Hawaiian (HA) JetBlue Airways (JBLU) SkyWest (SKYW) Southwest Airlines (LUV) United Continental (UAL) Source: Capital Q 17,879 35,580 2,023 5,450 2,909 30,318 21,961 37,327 44,164 2,057 5,814 5,040 30,691 31,393 0.87x 1.02x 0.73x 0.80x 1.56x 1.44x 0.80x 5.7x 5.7x 3.4x 4.1x 7.2x 6.9x 5.7x 8.2x 8.0x 4.1x 5.9x 12.6x 8.9x 9.2x 10.5x 10.8x 5.8x 4.9x 6.6x 8.6x 11.4x 8.2x 8.8x 7.2x 10.8x 11.8% 12.3x 9.3x Print Done
