Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Delta Air Lines, Inc.'s cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from -0.7% to 20.7% annually, with expenses (COGS, SG&A, R&D) held at historical ratios. Depreciation is computed from a vintage matrix based on a 5-year useful life. Working capital is modeled using historical turnover days (DSO 21, DPO 44, DIO 12). At a 7.7% WACC with mid-year discounting, the terminal value (88% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 16.6x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $395.38 per share, suggesting DAL is undervalued by 488.1% at the current price of $67.22.
Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.
| 2026 | 2027 | 2028 | 2029 | 2030 | Terminal | |
|---|---|---|---|---|---|---|
| Profit Before Tax | 9,123 | 9,568 | 10,015 | 10,561 | 12,742 | 13,061 |
| (−) Net Interest | 1,263 | 1,325 | 1,387 | 1,462 | 1,764 | 1,808 |
| (+) D&A | 4,915 | 5,476 | 5,472 | 5,736 | 6,109 | 6,261 |
| EBITDA | 15,301 | 16,369 | 16,874 | 17,759 | 20,615 | 21,130 |
| (−) Tax | 2,253 | 2,363 | 2,473 | 2,608 | 3,146 | — |
| (−) CapEx | 6,050 | 6,346 | 6,642 | 7,004 | 8,451 | — |
| (−) ΔWC | 44 | -36 | -36 | -44 | -175 | — |
| Free Cash Flow (FCF) | 6,954 | 7,696 | 7,794 | 8,191 | 9,193 | — |
| Peers' EBITDA Multiple | 16.6x | |||||
| Terminal Value | 350,548 | |||||
| WACC / Discount Rate | 7.66% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 6,702 | 6,890 | 6,481 | 6,326 | 6,595 | 242,375 |
| Enterprise Value | 275,369 | |||||
| Projection Period | 32,994 | 12.0% | ||||
| Terminal Value | 242,375 | 88.0% | ||||
| (−) Current Net Debt | 16,773 | |||||
| Equity Value | 258,596 | |||||
| (÷) Outstanding Shares | 654M | |||||
| Fair Price | $395 | +488.2% | ||||
| WACC \ EV/EBITDA Exit Multiple | 12.6x | 14.6x | 16.6x | 18.6x | 20.6x |
|---|---|---|---|---|---|
| 5.7% | $336 | $385 | $434 | $483 | $532 |
| 6.7% | $321 | $367 | $414 | $461 | $508 |
| 7.7% | $306 | $351 | $395 | $440 | $485 |
| 8.7% | $292 | $335 | $378 | $420 | $463 |
| 9.7% | $279 | $320 | $361 | $401 | $442 |
Current price: $67.22. Green = undervalued, Red = overvalued.
Based on default parameters
This is an unlevered Free Cash Flow to Firm (FCFF) model with a 5-year projection period. Revenue, expenses, D&A, and working capital are projected using the same line-by-line approach as the Growth Exit models. The key difference is the terminal value methodology: instead of assuming perpetual cash flow growth, the terminal value is calculated by applying the industry peer median EV/EBITDA multiple to the projected Year 6 EBITDA.
Using a peer exit multiple anchors the terminal value to how the market currently prices comparable companies, rather than relying on a theoretical perpetual growth assumption. This approach captures relative valuation dynamics and is particularly useful when a company is expected to converge toward industry-average profitability over time. The sensitivity matrix shows how fair value changes across different WACC and EV/EBITDA multiple scenarios.