DCF Estimates By Request

By request, I did DCF estimates for Jet Blue – JBLU and Steve Madden.

Jet Blue looks like it’s a buy, but be careful. One of my friends described investment in an airline as ‘controlled descent into poverty’ Warren Buffett lost a ton of money in USAir in the ’90s. That said, I know one individual (very wealthy) who invested in Southwest immediately after Sept. 11th and sold in early 2004 for a 30% profit. I know another individual who sold Delta recently after buying it last march, for almost 300% profit. Jet Blue is non-union, and if it ever unionizes, its costs will increase substantially.
I actually like Jet Blue because the planes are comfortable and you can watch satellite TV during flight. Southwest is the Greyhound of the sky and seems to attract gutter trash and desperate business people. I hate their no assigned seat system. Anyway, back to Jet Blue. All of my experiences have been pleasant. They had trouble moving from their old fare booking system to Sabre, but it looks like those troubles are behind it, finally. So, remember that the secret to making money with an airline stock is buying and holding until you hit your price target, and then get out.

Steve Madden looks expensive despite the glowing report in Barrons a couple of weeks ago. Maybe I am missing something in my valuations?


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