For 2016, I took AIR's figures for 2015, and added 10% for inherent growth, added fuel savings ($363m), subtracted currency losses ($70m), took off 28% tax from the fuel and currency adjustments, and added $27m, for Virgin to break even.
For 2017 I assumed fuel cost and the exchange rates remained the same as those used in AIR's 2016 projections.
And added another 10% for inherent growth. VA to break even again.
Those assumptions give the following:
|
15a |
16 |
17 |
npat ul 1) |
357 |
623 |
459 |
eps ul |
0.319 |
0.556 |
0.410 |
po % |
50% |
50% |
50% |
gdps |
0.222 |
0.388 |
0.286 |
gy% |
8.9% |
15.6% |
11.5% |
As to historic PE - since 2007 the median annual low PE is 8.4; median annual high is 12.7.
Mid point is 10.6
Morningstar figures used.
If those figures are right, it would seem reasonable for the market to 'look through' the abnormally high 2016 profit and use some estimate of 2017 profit to value AIR - with due allowance for a special div of say 15cps in 2016.
A PE of 10 on the 2017 eps would give $4.10 in 2017.
Or say $3.38 now (discount $4.10 at 10% for two years), plus 15c = $3.53.