Air New Zealand Limited (AIR)

Discount cash flow analysis

Sell Overvalued by 41.0%

5% margin of safety What's this?

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How does this work?

This is an interactive analyst report for Air New Zealand 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
2008 2009 2010 2011 2012 2013 2014 2015
 
                 
               
 

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% $1.12 $1.11 $1.10
Terminal Growth% 0 $1.12 $1.11 $1.10
  +1% $1.12 $1.11 $1.10

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 $0.29 (overvalued by 84.57%) - 8 months ago
  • kuangxiaohui created a new valuation of $2.95 (undervalued by 132.28%) - over 7 years ago
  • kuangxiaohui created a new valuation of $3.76 (undervalued by 196.06%) - over 7 years ago
  • kuangxiaohui created a new valuation of $3.76 (undervalued by 196.06%) - over 7 years ago
  • kuangxiaohui created a new valuation of $3.76 (undervalued by 196.06%) - over 7 years ago
  • kuangxiaohui created a new valuation of $2.92 (undervalued by 129.92%) - over 7 years ago
  • kuangxiaohui created a new valuation of $2.92 (undervalued by 129.92%) - over 7 years ago
  • kuangxiaohui created a new valuation of $2.92 (undervalued by 129.92%) - over 7 years ago
  • kuangxiaohui created a new valuation of $3.76 (undervalued by 198.41%) - over 7 years ago
  • kuangxiaohui created a new valuation of $3.76 (undervalued by 198.41%) - over 7 years ago
  • kuangxiaohui created a new valuation of $3.76 (undervalued by 198.41%) - over 7 years ago
  • kuangxiaohui created a new valuation of $3.76 (undervalued by 198.41%) - over 7 years ago
  • kuangxiaohui created a new valuation of $2.92 (undervalued by 131.75%) - over 7 years ago
  • kuangxiaohui created a new valuation of $2.92 (undervalued by 131.75%) - over 7 years ago
  • kuangxiaohui created a new valuation of $2.95 (undervalued by 134.13%) - over 7 years ago
  • kuangxiaohui created a new valuation of $2.95 (undervalued by 134.13%) - over 7 years ago
  • GordonGekko created a new valuation of $0.83 (overvalued by 7.78%) - almost 8 years ago
  • GordonGekko created a new valuation of $1.15 (undervalued by 10.58%) - almost 8 years ago
  • jmsnz created a new valuation of $1.10 (undervalued by 6.8%) - 8 years ago
  • mattellingsen created a new valuation of $13.75 (undervalued by 1248.04%) - 8 years ago
  • jetjungle created a new valuation of $2.82 (undervalued by 213.33%) - 8 years ago
  • GordonGekko created a new valuation of $1.11 (undervalued by 38.75%) - 8 years ago
  • nzvikram created a new valuation of $2.12 (undervalued by 146.51%) - over 8 years ago
  • stevesnz created a new valuation of $0.87 (overvalued by 2.25%) - over 8 years ago
  • Warlock created a new valuation of $1.26 (overvalued by 0.79%) - almost 9 years ago
  • Sam created a new valuation of $1.86 (undervalued by 44.19%) - 9 years ago
  • GordonGekko created a new valuation of $1.24 (overvalued by 3.88%) - 9 years ago
  • KiwiEMH created a new valuation of $1.18 (undervalued by 3.51%) - 9 years ago
  • Julian created a new valuation of $0.46 (overvalued by 58.93%) - 9 years ago
  • GordonGekko created a new valuation of $1.12 (undervalued by 0.0%) - 9 years ago
  • Abo created a new valuation of $0.23 (overvalued by 81.45%) - 9 years ago
  • gmw created a new valuation of $0.17 (overvalued by 80.0%) - 9 years ago
  • jeremy created a new valuation of $2.55 (undervalued by 97.67%) - 9 years ago

Comments

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The boring details

All amounts in millions Figures
Enterprise Value: 1,902
Net Debt (Long-term borrowings less cash): -85
Equity Value: 845
Number of Shares Outstanding: 1,057,000,000
Calculated value per share: $1.11

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.