WestJet Multiples Analysis

I just completed this Comp’s/Multiples analysis for a class project and wanted to share with the blog:

With this analysis, I was also able to prepare the following valuation:

This average target price represents a 12.3% increase over what the stock is trading at. The main risk here is oil as it looks like oil prices are bottoming out. My recommendation would entail waiting for the oil cycle to reverse up and then buy WJA when oil is high as opposed to when it is low. Airline stocks serve as an excellent hedge, as they tend to go up when oil goes down and are often negatively correlated with the market.

 

 

 

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