What is your Airline worth?
01-31-2009 | 05:59 PM
#11
Line Holder
Joined: Oct 2008
Posts: 59
Likes: 0
Not quite...
Quote:
Originally Posted by Boogie Nights
Market capitalization/capitalisation (aka market cap, mkt cap or capitalized/capitalised value) is a measurement of corporate economic Wealth size equal to the share price times the number of shares outstanding of a public company. As owning stock represents owning the company, including all its assets, capitalization could represent the public opinion of a company's net worth and is a determining factor in stock valuation.(quote)
Probably only in Econ 101. If it was an accurate measurement, then these stock prices need to at least go up 100%. Most legacys have more cash in the bank than their market cap states. But this is the danger of the infamous "leveraged buyout" that Lorenzo and others perfected.
Carpe Diem
You beat me to it. DAL's cash on hand is slightly more than $6 billion. Thank God the hedge funds have no capital to do anything. From a stock standpoint, this indicates supremely undervalued prices. However, given the market and uncertainty it would be risky to do any investing in airlines. However, if you have some cash and are willing to gamble, there could potentially be some very good buys right now.
Originally Posted by Boogie Nights
Market capitalization/capitalisation (aka market cap, mkt cap or capitalized/capitalised value) is a measurement of corporate economic Wealth size equal to the share price times the number of shares outstanding of a public company. As owning stock represents owning the company, including all its assets, capitalization could represent the public opinion of a company's net worth and is a determining factor in stock valuation.(quote)
Probably only in Econ 101. If it was an accurate measurement, then these stock prices need to at least go up 100%. Most legacys have more cash in the bank than their market cap states. But this is the danger of the infamous "leveraged buyout" that Lorenzo and others perfected.
Carpe Diem
You beat me to it. DAL's cash on hand is slightly more than $6 billion. Thank God the hedge funds have no capital to do anything. From a stock standpoint, this indicates supremely undervalued prices. However, given the market and uncertainty it would be risky to do any investing in airlines. However, if you have some cash and are willing to gamble, there could potentially be some very good buys right now.
Just because a company (or airline) has $6 billion in cash, does not mean that the market capitalization is an incorrect measurement of how investors value the company. Remember that a company also has DEBTS in the form of accounts payable, salaries, etc, etc. You need to check how much cash a company has as compared to the liabilities on the B/S. They must be able to service their debt first and foremost before shareholders will see any value in the form or return on their investment.
As far as the AA stock price being less than UAL, et al.. Looking at market cap is a much better estimate of what investors value the company at. Remember that investors look toward the future and the prospect of future EPS. Too often people simply look at a cheap stock price and see a good deal when it could easily be quite the opposite.
Thread
Thread Starter
Forum
Replies
Last Post
conceited
Flight Schools and Training
5
01-28-2009 05:29 PM
