As of May 22, 2025, American Airlines Group Inc's estimated intrinsic value ranges from $7.36 to $220.22 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $16.88 | +50.1% |
| Discounted Cash Flow (5Y) | $12.39 | +10.2% |
| Dividend Discount Model (Multi-Stage) | $7.36 | -34.5% |
| Dividend Discount Model (Stable) | $7.37 | -34.4% |
| Earnings Power Value | $220.22 | +1859.3% |
Is American Airlines Group Inc (AAL) undervalued or overvalued?
With the current market price at $11.24, the stock appears to be significantly undervalued.
Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate American Airlines Group Inc's intrinsic value, including:
The cost of capital is a critical factor in valuation models, representing the required return for investors.
| WACC Component | Low | High |
|---|---|---|
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 1.51 | 1.97 |
| Cost of equity | 10.8% | 15.9% |
| Cost of debt | 5.4% | 9.1% |
| Tax rate | 25.0% | 26.7% |
| Debt/Equity ratio | 3.9 | 3.9 |
| After-tax WACC | 5.5% | 8.6% |
Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:
| DCF Model | Fair Value | Enterprise Value | % from Terminal Value |
|---|---|---|---|
| 5-Year Growth | $12 | $36,778M | 76.6% |
| 10-Year Growth | $17 | $39,736M | 58.3% |
| 5-Year EBITDA | $9 | $34,280M | 74.9% |
| 10-Year EBITDA | $16 | $39,234M | 57.7% |
The DDM values a company based on its expected future dividend payments. We used two approaches:
EPV assesses a company's value based on its current normalized earnings power, assuming no growth.
| EPV Component | Value |
|---|---|
| Normalized Earnings | $11,583M |
| Discount Rate (WACC) | 8.6% - 5.5% |
| Enterprise Value | $135,308M - $212,384M |
| Net Debt | $28,607M |
| Equity Value | $106,701M - $183,777M |
| Outstanding Shares | 660M |
| Fair Value | $162 - $279 |
| Selected Fair Value | $220.22 |
| Metric | Value |
|---|---|
| Market Capitalization | $7413M |
| Enterprise Value | $36020M |
| Trailing P/E | 10.82 |
| Forward P/E | 8.77 |
| Trailing EV/EBITDA | 5.80 |
| Current Dividend Yield | 0.00% |
| Dividend Growth Rate (5Y) | -100.00% |
| Debt-to-Equity Ratio | 3.90 |
To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:
| Valuation Method | Weight | Weighted Value |
|---|---|---|
| Discounted Cash Flow (10Y) | 30% | $5.06 |
| Discounted Cash Flow (5Y) | 25% | $3.10 |
| Dividend Discount Model (Multi-Stage) | 20% | $1.47 |
| Dividend Discount Model (Stable) | 15% | $1.11 |
| Earnings Power Value | 10% | $22.02 |
| Weighted Average | 100% | $32.76 |
Based on our comprehensive valuation analysis, American Airlines Group Inc's weighted average intrinsic value is $32.76, which is approximately 191.5% above the current market price of $11.24.
Key investment considerations:
Given these factors, we believe American Airlines Group Inc is currently significantly undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.