Originally Posted by
modandm
It's nothing to do with any moving average. The share price had dipped as oil rose. Oil fell and the shares bounced back. Normal short term market volatility.
My estimates on the previous page are after tax earnings. Yes they would be comparable to 'normalised earnings' as I have not incorporated any gain or loss on hedging future periods.
No offence but DCF's are generally not a great valuation method, and even less appropriate for volatile industries such as this. Common methods would be using peer group multiples such as EV/EBIT, EV/EBITDAR, P/E, and P/B vs ROE. Fundamentally AIR is cheap vs peers, which I believe is unwarranted given the lack of competition it faces, strong management, fleet age, and so forth.
I have commented in the past about how an appropriate multiple should reflect where in the cycle the company is. In FY16 I see AIR at mid cycle, with macro tailwinds through lower oil. As such I expect the stock to trade on about 9x historic earnings and a 6% yield. Fortunately on my estimate of 46cps EPS FY16 that still gives us a lot of upside (to $4.14) and we will be paid well to wait with dividends.
After FY16 earnings momentum will slow considerably - about 10%-15%p.a based on constant FX and fuel (which obviously aren't constant). However the company will be generating tremendous free cash flow. This means BIG special dividends and good valuation support.
I'm glad to see others are on-board so to speak - but don't be impatient with this one. I expect the journey north to be gradual, and with some turbulence. Just relax to a nice movie, and keep a close eye on the external factors...
- Mod