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Strategies & Market Trends : Value Investing

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To: gcrispin who wrote (55637)	7/7/2015 10:01:13 PM
From: Graham Osborn	Read Replies (2) of 78702

Hi gcrispin, Sorry I didn't give this proper attention the first time round. Thanks for a good post. My thoughts: LUV - Price: 33.40 NCAVPS: -13.75 (typical for airlines) D/ E: 0.090 P/ TB: 4.1 EV/ Rev: 1.1 EV/ EBITDA: 6.3 EV/ FCF: 16 EBIT/ Interest: 24 ROE: 20% ROA: 7% ROIC: 15% 10Y Rev Growth: 11% 10Y Tbook Growth: -0.15% Tbook growth past 10+ years: P/ TB and PE 10 past 10+ years: Rev/ NI past 10+ years: CFO/ FCF past 10+ years: Net income has benefited substantially due to recent drop in fuel prices. They have taken offsetting derivative positions during the slide in oil prices leaving themselves net unhedged at present. Unrealized losses from previous hedges of 740M to be realized in future years as shown. The hedges bite both ways. They do, however, enable some creative booking. IMO, this is a great business to work for, and a great airline to fly with (I use LUV regularly and love their sassy culture/ service). And it was clearly a great business to own for many years. But since the 2000s, while they’ve grown capacity, they haven’t created shareholder value. Sincerely, Graham

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