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Delta Air Lines Inc. (DAL)

Enterprise Value to FCFF (EV/FCFF)

Difficulty: Intermediate

Delta Air Lines Inc., FCFF calculation

USD $ in millions

	12 months ended	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014
	Net income
	Net noncash charges
	Changes in certain assets and liabilities
	Net cash provided by operating activities
	Cash paid for interest, net of tax¹
	Property and equipment additions
	Flight and ground equipment acquired under finance leases
	Free cash flow to the firm (FCFF)

Item	Description	The company
FCFF	Free cash flow to the firm is the cash flow available to the Delta Air Lines Inc.’s suppliers of capital after all operating expenses have been paid and necessary investments in working and fixed capital have been made.	Delta Air Lines Inc.’s FCFF declined from 2016 to 2017 but then slightly increased from 2017 to 2018.

Delta Air Lines Inc., interest paid, net of tax calculation

USD $ in millions

	12 months ended	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014
	Effective Income Tax Rate (EITR)

	EITR¹
	Interest Paid, Net of Tax
	Cash paid for interest, before tax
	Less: Cash paid for interest, tax²
	Cash paid for interest, net of tax

2018 Calculations

² Cash paid for interest, tax = Cash paid for interest × EITR
= hidden × hidden = hidden

Delta Air Lines Inc., current EV/FCFF calculation, comparison to benchmarks

Selected Financial Data (USD $ in millions)
Enterprise value (EV)
Free cash flow to the firm (FCFF)
Ratio
EV/FCFF
Benchmarks
EV/FCFF, Competitors
Booking Holdings Inc.
Marriott International Inc.
McDonald’s Corp.
Starbucks Corp.
EV/FCFF, Sector
Travel & Leisure
EV/FCFF, Industry
Consumer Services

If company EV/FCFF is lower then the EV/FCFF of benchmark then company is relatively undervalued.

Otherwise, if company EV/FCFF is higher then the EV/FCFF of benchmark then company is relatively overvalued.

Delta Air Lines Inc., historical EV/FCFF calculation, comparison to benchmarks

		Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014
	Selected Financial Data (USD $ in millions)
	Enterprise value (EV)¹
	Free cash flow to the firm (FCFF)²
	Ratio
	EV/FCFF³
	Benchmarks
	EV/FCFF, Competitors
	Booking Holdings Inc.
	Marriott International Inc.
	McDonald’s Corp.
	Starbucks Corp.
	EV/FCFF, Sector
	Travel & Leisure
	EV/FCFF, Industry
	Consumer Services

2018 Calculations

³ EV/FCFF = EV ÷ FCFF
= hidden ÷ hidden = hidden

Ratio	Description	The company
EV/FCFF	Enterprise value to free cash flow to the firm is whole company valuation indicator.	Delta Air Lines Inc.’s EV/FCFF ratio increased from 2016 to 2017 but then slightly declined from 2017 to 2018 not reaching 2016 level.

	Delta Air Lines Inc.	Other companies (not purchased previously)
Financial Statements
Common-Size Financial Statements
Ratios
Relative Valuation
Discounted Cash Flow (DCF) Valuation
Economic Value Added (EVA)
Long-term Trends
Analysis
Financial Reporting Quality

	All companies
Financial Statements
Common-Size Financial Statements
Ratios
Relative Valuation
Discounted Cash Flow (DCF) Valuation
Economic Value Added (EVA)
Long-term Trends
Analysis
Financial Reporting Quality