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United Airlines Holdings, Inc. (UAL) Intrinsic Value

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

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United Airlines Holdings, Inc. (UAL)

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Intrinsic Value (DCF)

Current$116.02
→
Intrinsic$151.74
+31%
$80.12$151.74$287.86
Market implies 6% growth for 5 years
DCF analysis suggests UAL could have 31% upside at 10% growth — verify assumptions match your view.
At $116, the market prices in only 6% growth — below historical 10%, suggesting low expectations.
Range: Bear $80 → Bull $288. Current price implies expectations below the base case, but well above the bear case.
Discount ↓Growth →6%8%10%12%
8%$195$219$245$273
10%$117$134$152$171
12%$74$86$100$114
14%$47$56$67$78

Bull Case

  • Bull case ($288) offers 148% upside at 12% growth, 9% discount
  • 24% margin of safety vs. base case estimate
  • Market-implied growth (6%) ≤ historical CAGR (10%)

Bear Case

  • Bear case ($80) implies 31% downside at 8% growth, 12% discount
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5-Year Free Cash Flow Projection

Year 1$4.21B
Year 2$4.63B
Year 3$5.09B
Year 4$5.60B
Year 5$6.16B
Terminal$90.65B

📐 Model Inputs

Growth Rate10.0%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate10.0%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Free Cash Flow$3.83BTTM 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 UAL stock undervalued or overvalued?
🟢 UNDERVALUED

UAL trades at $116.02 vs. our DCF-derived intrinsic value of $151.74, implying +29% upside. At a 10.0% WACC and 10.0% projected FCF growth, the market appears to be underpricing the present value of UAL's future cash flows. The bear case ($86.52) still suggests upside, providing margin of safety.

What is UAL's intrinsic value?

Using a 5-year DCF model: Base FCF of $3.83B, projected at 10.0% 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 $24.86B net debt and dividing by 0.33B shares: Bear $86.52 | Base $151.74 | Bull $240.54. Current price $116.02 implies +29% to base case.

How is UAL's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 10.0% 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 ($75.42B).

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: 19.7x.