Consider the following data for the airline industry for April 2019 (EV = enterprise value, Book =
Question:
Consider the following data for the airline industry for April 2019 (EV = enterprise value, Book = equity book value). Discuss the potential challenges of using multiples to value an airline.
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Company Name Delta Air Lines (DAL) American Airlines (AAL) United Continental (UAL) Southwest Airlines (LUV) Alaska Air (ALK) JetBlue Airways (JBLU) Market Capitalization 39,057 15,295 22,648 29,431 7,236 5,008 SkyWest (SKYW) Hawaiian (HA) Source: Morningstar and Yahoo Finance, April 2019. 3,000 1,366 Enterprise Value (EV) 47,060 33,745 32,143 29,119 8,103 5,791 5,471 1,575 EV/Sales 1.1x 0.8x 0.8x 1.3x 1.0x 0.8x 1.7x 0.6x EV/EBITDA 6.0x 6.3x 5.8x 6.5x 7.7x 7.3x 6.7x 3.4x EV/EBIT P/E 10.2x 11.2x 11.0x 12.4x 16.6x 27.7x 11.0x 6.1x 8.6x 10.5x 9.7x 8.9x 12.3x 19.2x 11.3x 4.8x P/Book 2.9x 1.3x 2.3x 3.0x 1.9x 1.1x 1.5x 1.4x
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Related Book For
Fundamentals Of Corporate Finance
ISBN: 9780135811603
5th Edition
Authors: Jonathan Berk, Peter DeMarzo, Jarrad Harford
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