ULCC
Frontier Group Holdings, Inc.
$7.58
Stable Earnings Power
40%
P/Adj-EPS × Normalized Multiple
Strong
·
Conviction
Undervalued
Trading 48.8% below fair value
You pay
$7.58
Bear
$11.84
Fair
$14.80
Bull
$17.76
Bear
$11.84
+56.2%
$0.75 × 18x P/E
Fair
$14.80
+95.3%
$0.75 × 22x P/E
Bull
$17.76
+134.3%
$0.75 × 27x P/E
Key Value Driver
Normalized P/E multiple (22x base case)
Implied Market Multiple
10.1x
Summary
Our base-case estimate uses a valuation based on adjusted earnings per share and a normalized price-to-earnings multiple. We then blend that result with the average analyst price target of $6.50 from 13 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $14.80 per share.
Warnings
Wall Street's average price target is $6.50 (from 13 analysts). Our estimate is 160% above the consensus -- consider that gap carefully.
Key Risks
- Growth DCF inappropriate — terminal value assumptions dominate
- EV/EBITDA misleading for regulated businesses where capex is mandated
- Regulatory risk is a fat tail not visible in normal multiples