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Copa Holdings, S.A. (CPA) Intrinsic Value

DCF-based fair value calculation with Bear, Base, and Bull scenarios

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Copa Holdings, S.A. (CPA)

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Intrinsic Value (DCF)

Current$128.92
→
Intrinsic$205.58
+59%
$129.51$205.58$350.01
Market implies 10% growth for 5 years
DCF analysis suggests CPA could have 59% upside at 20% growth — verify assumptions match your view.
At $129, the market prices in 10% annual cash flow growth — a moderate expectation aligned with historical trends (20%).
Range: Bear $130 → Bull $350. Current price implies expectations below the bear case — very conservative expectations.
Discount ↓Growth →16%18%20%22%
8%$258$282$308$336
10%$171$188$206$224
12%$123$136$149$163
14%$93$103$113$124

Bull Case

  • Bull case ($350) offers 171% upside at 24% growth, 9% discount
  • Price below even worst-case scenario — strong margin of safety
  • Market-implied growth (10%) ≤ historical CAGR (20%)

Bear Case

  • Bear case ($130) with 16% growth, 12% discount rate
  • Using 20% growth — aggressive, watch for mean reversion
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5-Year Free Cash Flow Projection

Year 1$408.71M
Year 2$490.58M
Year 3$588.84M
Year 4$706.79M
Year 5$848.36M
Terminal$12.48B

📐 Model Inputs

Growth Rate20.0%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate10.0%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Free Cash Flow$340.51MTTM actual
Bear g×0.8, r+2%
Base Historical CAGR
Bull g×1.2, r−1.5%
ℹ️

DCF estimates based on historical growth rates extrapolated forward. See FAQ below for full methodology.

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Frequently Asked Questions

Is CPA stock undervalued or overvalued?
🟢 UNDERVALUED

CPA trades at $128.92 vs. our DCF-derived intrinsic value of $205.31, implying +61% upside. At a 10.0% WACC and 20.0% projected FCF growth, the market appears to be underpricing the present value of CPA's future cash flows. The bear case ($123.24) still suggests upside, providing margin of safety.

What is CPA's intrinsic value?

Using a 5-year DCF model: Base FCF of $341M, projected at 20.0% 5Y CAGR (best of revenue, EPS, or FCF growth), discounted at 10.0% WACC, with 3.0% terminal growth. Terminal value calculated via Gordon Growth Model: TV = FCF₅ × (1+g) / (WACC−g). After deducting $1.39B net debt and dividing by 0.04B shares: Bear $123.24 | Base $205.31 | Bull $326.16. Current price $128.92 implies +61% to base case.

How is CPA's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 20.0% growth derived from 5-year historical CAGR (best of revenue, EPS, or FCF growth, with 8% floor and 25% cap).

② Calculate terminal value at year 5 using perpetuity growth model with g=3.0%.

③ Discount all cash flows to PV using WACC=10.0%.

④ Sum PV of explicit period + PV of terminal value = Enterprise Value ($9.97B).

⑤ Subtract net debt, divide by shares outstanding.

Sensitivity analysis available above—adjust WACC ±2% or growth ±3% to stress-test the valuation. Implied EV/FCF multiple: 29.3x.