United Airlines Holdings, Inc.UALNASDAQ

Overview Intelligence Charts News Fundamentals Key Metrics TTM Financials Earnings Growth Rating Analysts Institutional Peers Historical

DCF Valuation

DCF Valuation Summary

Strong Buy

Fair Value: $684.28 per share(market-calibrated)

+563.0%

Upside to Fair Value

Current

$103.21

Pure Model

$719.87

Fair Value

$684.28

Bull Case

$924.55

Bear Case

$559.94

Market Reality Check

Model Terminal Growth

2.25%

Market-Implied Growth

0.50%

Calibrated Growth

1.64%

Fair value uses 65% model / 35% market-implied terminal growth. Pure model: $719.87.

What's Driving This Ratingfor UAL

↓

CapEx normalizing toward maintenance

Historical CapEx is 8.66% of revenue (heavy investment phase). Model fades this to 3.50% by Year 10, freeing up ~$4.9B in annual FCF. This is the biggest driver of long-term cash flow improvement.

→

Moderate revenue growth

Analyst consensus projects 8.20% revenue growth, fading to 2.25% by Year 10. Revenue reaches $94.6B (vs $59.1B today).

🎯

Market pricing in lower growth than model

The market implies only 0.50% perpetual growth — 175bps below the model's 2.25%. This suggests the market sees headwinds or risks not in the model.

✓

Strong cash flow conversion

Year 10 FCF/EBITDA conversion of 65.38% indicates efficient cash generation. FCF reaches $14.5B by Year 10 (15.35% FCF margin).

Weighted Average Cost of Capital (WACC)

Cost of Equity (CAPM)

Risk-Free Rate (Rf)4.50%

Beta (β)1.26

Market Risk Premium4.50%

*Using current implied premium (4.5% per Damodaran 2026), not historical (6.5%)

Cost of Equity (Re)10.18%

Cost of Debt

Pre-tax Cost of Debt4.19%

Tax Rate22.13%

After-tax Cost of Debt3.27%

Equity Weight (E/V)48.07%

Debt Weight (D/V)51.93%

WACC Calculation

WACC = (E/V × Re) + (D/V × Rd × (1-Tc))

WACC = (48.07% × 10.18%) + (51.93% × 3.27%)

= 6.59%

10-Year Free Cash Flow Projections(showing years 1, 3, 5, 7, 10)

Year	Year 1	Year 3	Year 5	Year 7	Year 10
Revenue	$63.9B	$72.0B	$79.4B	$86.8B	$94.6B
EBIT	$12.7B	$14.3B	$15.8B	$17.3B	$18.8B
Tax	$2.8B	$3.2B	$3.5B	$3.8B	$4.2B
NOPAT	$9.9B	$11.2B	$12.3B	$13.5B	$14.7B
+ Depreciation	$2.3B	$2.6B	$2.8B	$3.1B	$3.4B
- Capex	$5.5B	$5.4B	$5.1B	$4.5B	$3.3B
- Δ NWC	$484M	$369M	$418M	$353M	$208M
Free Cash Flow	$6.2B	$7.9B	$9.7B	$11.7B	$14.5B
Discount Factor	0.938	0.826	0.727	0.640	0.528
Present Value	$5.8B	$6.6B	$7.0B	$7.5B	$7.7B

FCF Formula: Free Cash Flow = NOPAT + Depreciation - Capex - Change in Net Working Capital

Terminal Value Calculation

Perpetuity Growth Method

Year 10 FCF$14.5B

Terminal Growth Rate2.25%

WACC6.59%

TV = FCF₁₀ × (1+g) / (WACC-g)

Terminal Value$341.9B

PV of Terminal Value$180.6B

Exit Multiple Method

Year 10 EBITDA$22.2B

Exit Multiple (EV/EBITDA)18.0x

TV = EBITDA₁₀ × Exit Multiple

Terminal Value$399.7B

PV of Terminal Value$211.1B

Valuation Summary

Perpetuity Growth Method

PV of Projected FCFs$70.1B

PV of Terminal Value$180.6B

Enterprise Value$250.7B

(-) Net Debt$30.5B

Equity Value$220.1B

Shares Outstanding327M

Price per Share$673.21

Exit Multiple Method

PV of Projected FCFs$70.1B

PV of Terminal Value$211.1B

Enterprise Value$281.2B

(-) Net Debt$30.5B

Equity Value$250.7B

Shares Outstanding327M

Price per Share$766.54

Pure Model Fair Value

$719.87

Average of perpetuity growth and exit multiple methods (before market calibration)

Sensitivity AnalysisPrice per Share

WACC ↓ / Growth →	1.25%	1.75%	2.25%	2.75%	3.25%
4.59%	$965.37	$1,043.41	$1,154.76	$1,245.17	$1,190.75
5.59%	$788.11	$828.89	$881.88	$953.50	$1,055.72
6.59%	$665.98	$690.15	$719.87	$757.34	$806.01
7.59%	$574.35	$589.86	$608.27	$630.49	$657.82
8.59%	$501.82	$512.34	$524.52	$538.79	$555.73

How to read: This table shows how the valuation changes with different WACC (discount rate) and terminal growth rate assumptions. Green = undervalued, Red = overvalued.

Scenario Analysis

Bear Case

$559.94

442.5% vs current

• -25% vs analyst consensus
• Terminal growth: 2.0%
• Beta: 1.58

Base Case

$719.87

597.5% vs current

• Analyst consensus
• Terminal growth: 2.3%
• Beta: 1.26

Bull Case

$924.55

795.8% vs current

• +25% vs analyst consensus
• Terminal growth: 2.8%
• Beta: 1.07

Key Assumptions & Drivers✓ Using Analyst Consensus Estimates• Industrials Sector

Growth Assumptions (Select Years)

Year 1 Revenue Growth8.20%

Year 3 Revenue Growth5.41%

Year 5 Revenue Growth5.56%

Year 7 Revenue Growth4.24%

Year 10 Revenue Growth2.25%

Terminal Growth Rate2.25%

Margin & Efficiency

Current EBIT Margin19.90%

Tax Rate22.13%

Historical Capex / Rev8.66%

Terminal Capex / Rev3.50%

NWC / Revenue10.00%

Key Drivers: Revenue growth, operating margin expansion, capex efficiency, and working capital management are the primary drivers of cash flow generation. Terminal value assumptions significantly impact final valuation.

Institutional-Grade Methodology

Actual Company Data: Revenue, EBIT, Capex, NWC, Tax Rate, Interest Expense, Beta

Market Assumptions: Risk-free: 4.5% (10Y), MRP: 4.5% (Damodaran 2026), Exit: 18x EV/EBITDA (Industrials sector)

This DCF model is for informational purposes only. Projections are based on assumptions that may not materialize. Past performance does not guarantee future results. Consult a financial advisor before making investment decisions.

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