Qantas Airways Limited (QAN)

Discount cash flow analysis

Buy Undervalued by 171.4%

5% margin of safety What's this?

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How does this work?

This is an interactive analyst report for Qantas Airways Limited, based on a discounted cash flow valuation approach.

You can modify the assumptions and the valuation will be updated automatically. You can also save and share your valuation.

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Values in $ millions
2007 2008 2009 2010 2011 2012 2013 2014
 
                 
               
 

What will the revenues be in the future?

Growth beyond year three is driven by the terminal growth rate.

Sensitivity matrix

   
-1% 		Discount Rate %
0%
1%
  -1% $3.85 $3.78 $3.71
Terminal Growth% 0 $3.87 $3.80 $3.73
  +1% $3.90 $3.83 $3.76

How does a change in discount rate or terminal growth affect valuation?

This table shows the sensitivity of the valuation to two key variables - the discount rate and the terminal growth rate

Valuations and comments

  • Valuecruncher created a new valuation of $0.11 (overvalued by 92.14%) - 8 hours ago
  • brl24 created a new valuation of $1.71 (overvalued by 18.96%) - over 3 years ago
  • GordonGekko created a new valuation of $2.06 (overvalued by 7.62%) - over 4 years ago
  • SethWellbourne created a new valuation of $2.21 (undervalued by 26.29%) - over 4 years ago
  • GordonGekko created a new valuation of $2.28 (undervalued by 30.29%) - over 4 years ago
  • ngupta88 created a new valuation of $3.21 (undervalued by 88.82%) - over 4 years ago
  • KiwiEMH created a new valuation of $3.20 (overvalued by 2.44%) - over 4 years ago
  • Abo created a new valuation of $2.86 (overvalued by 15.88%) - over 5 years ago
  • KiwiEMH created a new valuation of $3.49 (undervalued by 6.08%) - over 5 years ago
  • GordonGekko created a new valuation of $3.51 (undervalued by 0.57%) - over 5 years ago
  • Sam created a new valuation of $3.80 (undervalued by 8.88%) - over 5 years ago

Comments

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The boring details

All amounts in millions Figures
Enterprise Value: 3,885
Net Debt (Long-term borrowings less cash): 1,106
Equity Value: 6,927
Number of Shares Outstanding: 1,984,000,000
Calculated value per share: $3.80

Enterprise Value is the present value of the post-tax cash flows for a business into the future.

Calcuation of EV

Where:

  • C1, C2, C3 - the cash flow in period 1, 2, 3, ...
  • r - the discount rate

To capture the cash flows into the future a terminal value is calculated via a perpetuity calculation -
based on the final years forecast post-tax free cash flow.

Perpetuity

Where:

  • Cn - the cash flow in the final forecast period.
  • LTG - the long-term growth rate
  • r - the discount rate
  • g - the terminal growth rate

The Capital Asset Pricing Model (CAPM) is used to determine the equity component in the discount rate.

CAPM model

Where:

  • rt - the risk free rate
  • t - the tax rate
  • B - the beta of the company
  • MRP - the Market Risk Premium

Valuecruncher uses an estimate of Weighted Average Cost of Capital (WACC) to determine the discount rate in the calculation.