TGM's two-stage DCF values Delta Air Lines, Inc. (DAL) between $40.53 and $74.13 depending on assumptions, with a base case of $56.10. Growth is taken from the company's own record (5-year revenue CAGR (FCF growth too volatile to use) (capped at 18%)), fading to 2.5% long-run; the discount rate (10.5%) reflects its beta.
What would today's price require?
$87.73 is justified only if free cash flow grows about +27.6% a year (fading to 2.5% long-run) at a 10.5% required return — slower than the company has actually grown.
| Scenario | FCF growth (fading to 2.5%) | Discount | Value / share |
|---|---|---|---|
| Conservative | 15.0%/yr | 11.5% | $40.53 |
| Base case | 18.0%/yr | 10.5% | $56.10 |
| Optimistic | 20.0%/yr | 9.5% | $74.13 |
Current Price
$87.73
Market-Implied Growth
+27.6%/yr
vs +30.1% 5Y actual
Model Scenario Range
$40.53 – $74.13
model output — not a price target
Edit the assumptions to see how they change the estimated fair value. Opens seeded with TGM's data-driven base case for DAL (growth from its own 5-year record, discount from its beta), so the sandbox starts where the scenarios above leave off. Illustrative model — not investment advice.
Base inputs: FCF $2.0B · 0.66B shares · net debt $10.6B
Estimated Fair Value
$56.10
-36.1% vs $87.73
How the estimated fair value shifts with the discount rate (WACC) and terminal growth, holding your 18.0%/yr FCF growth and 10-year horizon fixed. Green = above today's $87.73; red = below. Your current case is outlined.
| WACC ↓ / Terminal → | 1.50% | 2.00% | 2.50% | 3.00% | 3.50% |
|---|---|---|---|---|---|
| 8.5% | $70.32 | $75.95 | $82.50 | $90.24 | $99.52 |
| 9.5% | $58.57 | $62.69 | $67.39 | $72.81 | $79.12 |
| 10.5% | $49.47 | $52.59 | $56.10 | $60.06 | $64.59 |
| 11.5% | $42.23 | $44.66 | $47.35 | $50.36 | $53.73 |
| 12.5% | $36.33 | $38.26 | $40.38 | $42.73 | $45.32 |
