Guidance is $5.35 of 2026 earnings after a $6 billion fuel hit. I model $6.50 in 2027 as fares stick and costs slow. At twelve times that is $78, a market-like return from $82.
Key points
- $5.35 is the midpoint of 2026 adjusted EPS after the October 9 cut from $6.50, $7.50.
- $6.50 is my 2027 EPS if unit revenue holds and CASM-Ex grows in the low single digits.
- 12 times that earnings is $78, about 5% below $82.03.
The call
The $82 stock needs about $6.80 of 2027 earnings at twelve times, or $5.50 at fifteen times. That is a full fuel-normalization year plus a richer multiple than airlines usually keep after a spike.
I believe 2027 earnings land near $6.50, not $6.80, because December fuel is guided at $4.25 a gallon and non-fuel unit costs still grow. Premium mix and Amex pay keep the floor, so the shares track the market.
Adjusted EPS by year, $ per share- Reported / guided
- My 2027 estimate
Company adjusted EPS through 2026 guidance midpoint; 2027E is mine. As of Oct 9, 2026.
Valuation
| Item | Figure |
|---|
| 2026 adj. EPS (midpoint) | $5.35 |
| My 2027 adj. EPS | $6.50 |
| Multiple | 12 times |
| 12-month target | $78 |
| Implied return vs $82.03 | -5% |
Twelve times is a mid-cycle airline multiple once fuel is no longer a surprise. Fifteen times would need a clear drop in jet fuel and a CASM-Ex print under 3%. The asymmetry is modest: a $1 miss on 2027 EPS is about $12 a share.
Adjusted operating margin vs jet fuel, quarterlyFuel is adjusted $/gal; margin is company-adjusted. Source: 10-Q and Oct 9 release.
Risks
- Jet fuel stays near $4 a gallon into 2027; watch Gulf Coast spots and the December realized cost.
- Main-cabin yields fade if industry seats return; watch sequential TRASM and load factor.
- Labor and airport costs keep CASM-Ex above 5%; watch 2027 unit-cost language on the January call.
What would change my mind
A December-quarter fuel print well below $3.80 a gallon with TRASM still up double digits would support $7 of 2027 earnings and a buy.