What is JBLU's Intrinsic value?

JetBlue Airways Corp (JBLU) Intrinsic Value Analysis

Executive Summary

As of May 25, 2025, JetBlue Airways Corp's estimated intrinsic value ranges from $43.37 to $43.37 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Earnings Power Value $43.37 +779.7%

Is JetBlue Airways Corp (JBLU) undervalued or overvalued?

With the current market price at $4.93, the stock appears to be significantly undervalued.

Understanding Intrinsic Value

Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate JetBlue Airways Corp's intrinsic value, including:

  1. Earnings Power Value (EPV): Values the company based on its current earnings power, assuming no growth

Weighted Average Cost of Capital (WACC)

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 0.72 1.36
Cost of equity 7.2% 12.5%
Cost of debt 4.0% 7.0%
Tax rate 14.8% 21.7%
Debt/Equity ratio 4.89 4.89
After-tax WACC 4.0% 6.7%

Valuation Methods

3. Earnings Power Value (EPV)

EPV assesses a company's value based on its current normalized earnings power, assuming no growth.

EPV Component Value
Normalized Earnings $1,086M
Discount Rate (WACC) 6.7% - 4.0%
Enterprise Value $16,269M - $26,820M
Net Debt $6,177M
Equity Value $10,092M - $20,643M
Outstanding Shares 354M
Fair Value $28 - $58
Selected Fair Value $43.37

Key Financial Metrics

Metric Value
Market Capitalization $1747M
Enterprise Value $7924M
Trailing P/E 0.00
Forward P/E 0.00
Trailing EV/EBITDA 5.80
Current Dividend Yield 0.00%
Dividend Growth Rate (5Y) 0.00%
Debt-to-Equity Ratio 4.89

Investment Decision Framework

To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:

  1. Forecast Certainty: DCF methods rely on long-term projections, while earnings power value focuses on current normalized earnings
  2. Business Model Alignment: Dividend models are more appropriate for mature companies with established dividend policies
  3. Historical Accuracy: How well each method has predicted fair value historically

Valuation Weight Matrix

Valuation Method Weight Weighted Value
Earnings Power Value 100% $4.34
Weighted Average 100% $43.37

Investment Conclusion

Based on our comprehensive valuation analysis, JetBlue Airways Corp's weighted average intrinsic value is $43.37, which is approximately 779.7% above the current market price of $4.93.

Key investment considerations:

  • Strong projected earnings growth (-9% to -1% margin)
  • Consistent cash flow generation

Given these factors, we believe JetBlue Airways Corp is currently significantly undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.