Editing EasyJet plc
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=== What's the expected return of an investment in the company? === | === What's the expected return of an investment in the company? === | ||
The Stockhub users estimate that the expected return of an investment in EasyJet plc over the next five years is '''positive 8.5%'''. This value was arrived at through the use an intrinsic valuation in the form of a discounted cash flow model. A relative valuation through a comparable company analysis was also conducted, although this resulted in a wildly different share price, and | The Stockhub users estimate that the expected return of an investment in EasyJet plc over the next five years is '''positive 8.5%'''. This value was arrived at through the use an intrinsic valuation in the form of a discounted cash flow model. A relative valuation through a comparable company analysis was also conducted, although this resulted in a wildly different share price, '''and further investigation is required to refine the model.''' | ||
Assuming that a suitable return level of five years is 10% per year (based of the S&P 500 returns) and EasyJet achieves its return level of positive 8.5%, then the company can be considered 'undervalued'. | Assuming that a suitable return level of five years is 10% per year (based of the S&P 500 returns) and EasyJet achieves its return level of positive 8.5%, then the company can be considered 'undervalued'. | ||
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# Comparing key financial metrics of the company to other similar investment | # Comparing key financial metrics of the company to other similar investment | ||
Research has suggested that to estimate the expected return of an investment over a long-term investment horizon, a discounted cash flow model provides an accurate projection. For completeness a comparable company analysis has been conducted, however the accuracy of the analysis is limited due to the fact that | Research has suggested that to estimate the expected return of an investment over a long-term investment horizon, a discounted cash flow model provides an accurate projection. For completeness a comparable company analysis has been conducted, however the accuracy of the analysis is limited due to the fact that '''WHY''' | ||
|- | |- | ||
|Financial Projections | |Financial Projections | ||
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===Discounted Cash Flow Model=== | ===Discounted Cash Flow Model=== | ||
{| class="wikitable" | {| class="wikitable" | ||
| colspan=" | | colspan="16" |Current Share Price: £4.46 | ||
|- | |- | ||
!''£ million'' | !''£ million'' | ||
! colspan="9" |''Historical'' | ! colspan="9" |''Historical'' | ||
! colspan="5" |''Projected'' | ! colspan="5" |''Projected'' | ||
! | |||
|- | |- | ||
! | ! | ||
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!2026 | !2026 | ||
!2027 | !2027 | ||
!Notes | |||
|- | |- | ||
! colspan=" | ! colspan="16" |Income Statement | ||
|- | |- | ||
|Revenue | |Revenue | ||
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|10212 | |10212 | ||
|11029 | |11029 | ||
| | |||
|- | |- | ||
|''% growth'' | |''% growth'' | ||
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|5% | |5% | ||
|8% | |8% | ||
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|- | |- | ||
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| | | | ||
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|7783 | |7783 | ||
|8405 | |8405 | ||
| | |||
|- | |- | ||
|''% of revenue'' | |''% of revenue'' | ||
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|76% | |76% | ||
|76% | |76% | ||
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|- | |- | ||
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Line 660: | Line 668: | ||
|2429 | |2429 | ||
|2623 | |2623 | ||
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|- | |- | ||
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| | | | ||
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|239 | |239 | ||
|258 | |258 | ||
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|- | |- | ||
|''% of revenue'' | |''% of revenue'' | ||
Line 708: | Line 719: | ||
|2% | |2% | ||
|2% | |2% | ||
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|- | |- | ||
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| | | | ||
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|390 | |390 | ||
|421 | |421 | ||
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|- | |- | ||
|''% of revenue'' | |''% of revenue'' | ||
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|4% | |4% | ||
|4% | |4% | ||
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|- | |- | ||
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|27 | |27 | ||
|29 | |29 | ||
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|- | |- | ||
|''% of revenue'' | |''% of revenue'' | ||
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|0.3% | |0.3% | ||
|0.3% | |0.3% | ||
| | |||
|- | |- | ||
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|676 | |676 | ||
|730 | |730 | ||
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|- | |- | ||
|% of revenue | |% of revenue | ||
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|7% | |7% | ||
|7% | |7% | ||
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|- | |- | ||
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|1332 | |1332 | ||
|1438 | |1438 | ||
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|- | |- | ||
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|1097 | |1097 | ||
|1185 | |1185 | ||
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|- | |- | ||
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|1487 | |1487 | ||
|1606 | |1606 | ||
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|- | |- | ||
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|195 | |195 | ||
|211 | |211 | ||
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|- | |- | ||
|''Effective tax rate'' | |''Effective tax rate'' | ||
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|18% | |18% | ||
|18% | |18% | ||
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|- | |- | ||
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Line 1,028: | Line 1,059: | ||
|902 | |902 | ||
|974 | |974 | ||
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|- | |- | ||
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Line 1,045: | Line 1,078: | ||
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|- | |- | ||
! colspan=" | ! colspan="16" |Cashflow | ||
|- | |- | ||
|D&A | |D&A | ||
Line 1,062: | Line 1,095: | ||
|390 | |390 | ||
|421 | |421 | ||
| | |||
|- | |- | ||
|''% of revenue'' | |''% of revenue'' | ||
Line 1,078: | Line 1,112: | ||
|4% | |4% | ||
|4% | |4% | ||
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|- | |- | ||
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Line 1,110: | Line 1,146: | ||
| -1266 | | -1266 | ||
| -1367 | | -1367 | ||
| | |||
|- | |- | ||
|''% of revenue'' | |''% of revenue'' | ||
Line 1,126: | Line 1,163: | ||
|12% | |12% | ||
|12% | |12% | ||
| | |||
|- | |- | ||
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Line 1,158: | Line 1,197: | ||
| -233 | | -233 | ||
| -252 | | -252 | ||
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|- | |- | ||
|% of revenue | |% of revenue | ||
Line 1,174: | Line 1,214: | ||
| -2% | | -2% | ||
| -2% | | -2% | ||
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|- | |- | ||
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Line 1,206: | Line 1,248: | ||
|'''247''' | |'''247''' | ||
|'''259''' | |'''259''' | ||
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|} | |} | ||
{| class="wikitable" | {| class="wikitable" |