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SkyWest, Inc. (SKYW) Intrinsic Value

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

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SkyWest, Inc. (SKYW)

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Intrinsic Value (DCF)

Current$100.11
→
Intrinsic$195.65
+95%
$113.90$195.65$350.86
Market implies 8% growth for 5 years
DCF analysis suggests SKYW could have 95% upside at 20% growth — verify assumptions match your view.
At $100, the market prices in 8% annual cash flow growth — a moderate expectation aligned with historical trends (20%).
Range: Bear $114 → Bull $351. Current price implies expectations below the bear case — very conservative expectations.
Discount ↓Growth →16%18%20%22%
8%$252$278$306$335
10%$159$177$196$216
12%$107$121$135$150
14%$75$85$96$108

Bull Case

  • Bull case ($351) offers 250% upside at 24% growth, 9% discount
  • Price below even worst-case scenario — strong margin of safety
  • Market-implied growth (8%) ≤ historical CAGR (20%)

Bear Case

  • Bear case ($114) with 16% growth, 12% discount rate
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5-Year Free Cash Flow Projection

Year 1$437.01M
Year 2$524.42M
Year 3$629.30M
Year 4$755.16M
Year 5$906.19M
Terminal$13.33B

📐 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$364.18MTTM 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 SKYW stock undervalued or overvalued?
🟢 UNDERVALUED

SKYW trades at $100.11 vs. our DCF-derived intrinsic value of $195.65, implying +93% upside. At a 10.0% WACC and 20.0% projected FCF growth, the market appears to be underpricing the present value of SKYW's future cash flows. The bear case ($107.35) still suggests upside, providing margin of safety.

What is SKYW's intrinsic value?

Using a 5-year DCF model: Base FCF of $364M, 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 $2.53B net debt and dividing by 0.04B shares: Bear $107.35 | Base $195.65 | Bull $325.68. Current price $100.11 implies +93% to base case.

How is SKYW'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 ($10.66B).

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.