Turk Hava Yollari AO (IST:THYAO) Intrinsic Value: DCF (Earnings Based)

: ₺429.60 (As of Today)

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As of today (2023-06-07), Turk Hava Yollari AO's intrinsic value calculated from the Discounted Earnings model is ₺429.60.

Note: Discounted Earnings model is only suitable for predictable companies (Business Predictability Rank higher than 1-Star). If the company's predictability rank is 1-Star or Not Rated, result may not be accurate due to the low predictability of business and the data will not be stored into our database.

Turk Hava Yollari AO's Predictability Rank is 3-Stars.

Margin of Safety (Earnings Based) using Discounted Earnings model for Turk Hava Yollari AO is 61.50%.

The historical rank and industry rank for Turk Hava Yollari AO's Intrinsic Value: DCF (Earnings Based) or its related term are showing as below:

IST:THYAO' s Price-to-DCF (Earnings Based) Range Over the Past 10 Years
Min: 0.09 Med: 0.35 Max: 17.65
Current: 0.39

During the past 13 years, the highest Price-to-Intrinsic-Value-DCF (Earnings Based) Ratio of Turk Hava Yollari AO was 17.65. The lowest was 0.09. And the median was 0.35.

IST:THYAO's Price-to-DCF (Earnings Based) is ranked better than
77.57% of 107 companies
in the Transportation industry
Industry Median: 0.66 vs IST:THYAO: 0.39

Turk Hava Yollari AO Intrinsic Value: DCF (Earnings Based) Historical Data

The historical data trend for Turk Hava Yollari AO's Intrinsic Value: DCF (Earnings Based) can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

* Premium members only.

Turk Hava Yollari AO Annual Data

Trend

Dec13

Dec14

Dec15

Dec16

Dec17

Dec18

Dec19

Dec20

Dec21

Dec22

Intrinsic Value: DCF (Earnings Based)

46.31

46.89

-2,680.35

49.74

411.17

Turk Hava Yollari AO Quarterly Data
	Jun18	Sep18	Dec18	Mar19	Jun19	Sep19	Dec19	Mar20	Jun20	Sep20	Dec20	Mar21	Jun21	Sep21	Dec21	Mar22	Jun22	Sep22	Dec22	Mar23
Intrinsic Value: DCF (Earnings Based)																65.28	166.67	348.52	411.17	429.60

Turk Hava Yollari AO Intrinsic Value: DCF (Earnings Based) Calculation

This is the intrinsic value calculated from the Discounted Earnings model with default parameters. The calculation method is the same as Discounted Cash Flow model except earnings are used in the calculation instead of free cash flow. This is the default method of calculation with GuruFocus DCF calculator.

Usually a two-stage model is used in calculating the intrinsic value with discounted cash flow model. The first stage is called growth stage; the second is called the terminal stage. In the growth stage the company grows at a faster rate. Because it cannot grow at that rate forever, a lower rate is used for the terminal stage.

GuruFocus DCF calculator is a two-stage model. The default values are defined as:

1. Discount Rate: d = 10%
A reasonable discount rate assumption should be at least the long term average return of the stock market, which can be estimated from risk free rate plus risk premium of stock market. We used the 10-Year Treasury Constant Maturity Rate as the risk free rate and rounded up to the nearest integer, then added a risk premium of 6% to get the estimated discount rate. Some investors use their expected rate of return, which is also reasonable. A typical discount rate can be anywhere between 6% - 20%.

2. Growth Rate in the growth stage: g1 = 5%
Growth Rate in the growth stage = average earnings growth rate in the past 10 years. If it is higher than 20%, we use 20%. If it is less than 5%, we use 5% instead. => For companies with Average Earnings Growth Rate in the past 10 years less than 5%, GuruFocus defaults => Growth Rate: 5%

3. Years of Growth Stage: y1 = 10

4. Terminal Growth Rate: g2 = 4%

5. Years of Terminal Growth: y2 = 10

6. EPS without NRI: eps without nri = ₺34.409.
GuruFocus DCF calculator is actually a Discounted Earnings calculator, EPS without NRI is used as the default. The reason we are doing this is we found that historically stock prices are more correlated with earnings than free cash flow.

All of the default settings can be changed and the results are calculated automatically.

Turk Hava Yollari AO's Intrinsic Value: DCF (Earnings Based) for today is calculated as:

Intrinsic Value: DCF (Earnings Based)	=	EPS without NRI	*	{[(1+g1)/(1+d)	+	(1+g1)^2/(1+d)^2	+	...	+	(1+g1)^10/(1+d)^10]
	+	(1+g1)^10/(1+d)^10	*	[(1+g2)/(1+d)	+	(1+g2)^2/(1+d)^2	+	...	+	(1+g2)^10/(1+d)^10]}

set x = (1+g1)/(1+d) = (1+0.05)/(1+0.1) = 0.95454545454545
and y = (1+g2)/(1+d) = (1+0.04)/(1+0.1) = 0.94545454545455

Intrinsic Value: DCF (Earnings Based)

EPS without NRI

{[x

x^2

...

x^10]

x^10

y^2

...

y^10]}

EPS without NRI

(1-x^10)

(1-x)

x^10

(1-y^10)

(1-y)]

34.409

12.485

429.60

Margin of Safety % (DCF Earnings Based)	=	(Intrinsic Value: DCF (Earnings Based)	-	Current Price)	/	Intrinsic Value: DCF (Earnings Based)
	=	(429.6	-	165.40)	/	429.6
	=	61.50 %

Turk Hava Yollari AO (IST:THYAO) Intrinsic Value: DCF (Earnings Based) Explanation

Unlike valuation methods such as Net Current Asset Value, Tangible Book Value per Share, Graham Number, Median Ratio etc, discounted Cash Flow model evaluates the companies based on their future earnings power instead of their assets.

Be Aware

What you need to know about Discounted Earnings model:

1. The Discounted Earnings model evaluates a company based on its future earnings power
2. Growth is taken into account; therefore a faster growth company is worth more if everything else is the same.
3. Since we are projecting future growth, it is assumed that the company will grow at the same rate as it did during the past 10 years. Therefore this model works better for the companies that are relatively consistent performers.
4. The Discounted Earnings model works poorly for inconsistent performers like cyclicals.
5. Your expected return from the investment is a reasonable discount rate assumption.
6. A larger margin of safety should be required for companies with less predictable businesses.

You can screen for stocks that trade below their Intrinsic Value: DCF (FCF Based) and Intrinsic Value: DCF (Earnings Based) with the GuruFocus All-in-One Screener. Companies with a high Predictability Rank that trade at a discount to their Intrinsic Value: DCF (FCF Based) and Intrinsic Value: DCF (Earnings Based) can be found in the screen of Undervalued Predictable Companies.

Turk Hava Yollari AO Intrinsic Value: DCF (Earnings Based) Related Terms

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Turk Hava Yollari AO (IST:THYAO) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Industrials » Transportation » Turk Hava Yollari AO (IST:THYAO) » Definitions » Intrinsic Value: DCF (Earnings Based)

Comparable Companies

Traded in Other Exchanges

TKHVY:USA TU5A:Germany

Address

Havaalani Cad. No: 3/1, Genel Yonetim Binasi, 9th Floor, Yesilkoy, Bakirkoy, Istanbul, TUR, 34149

Website

https://www.turkishairlines.com

Turk Hava Yollari AO is a Turkish airline operator. It has one of the largest flight networks in the world, and transports passengers to many different regions. Additionally, it can provide long-haul direct cargo flights, and other logistics to serve a diverse range of customers. It has two operating segments: air transportation and aircraft technical maintenance operations. The majority of revenue is generated from transferring passengers and cargo (air transportation segment). The company owns several hangars to perform maintenance on different types of aircraft. Its geographical segments are Asia & Far East, Europe, Americas, Africa, and Middle East.

Turk Hava Yollari AO (IST:THYAO) Headlines

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