Global travel agency business Flight Centre Travel Group Ltd (ASX: FLT) has this morning downgraded its profit guidance for the 2015 financial year, just six weeks after the company told shareholders it was on track to achieve its forecast earnings.
Investors punished the stock which fell more than 10% to a new 52-week low of $31.41. The shares are now trading at a 43.6% discount to their $55.72 high recorded in March this year.
While the company noted that it was on track to achieving record results in countries such as the United Kingdom and the United States, conditions in the Australian leisure market remain challenging. Given that this is the company's largest operation, a slowdown is clearly a concern amongst investors.
In the release, the company said that it now expects underlying profit before tax (PBT) to be between $360-$390 million, compared to previous estimates of $395-$405 million. The upper range of the new estimate would reflect growth of roughly 4% on last year's $376.5 million result, while the lower end would reflect a 4% decline.
PBT for the first half is also tipped to decline compared to the prior corresponding period. After achieving $146.3 million in the first half last year, PBT is forecast to be between $136-$142 million this half – partially as a result of the uncertainty caused by the federal budget in May.
The company said: "While it is impossible to predict a timeframe for recovery, we expect stronger demand as the financial year progresses and as travellers start to take advantage of these cheap fares".
Should you buy?
Flight Centre is an exceptional company with fantastic long-term prospects and a buy today could deliver stellar returns for your portfolio over the coming years. However, given today's announcement, it's possible that the stock could have further to fall which means that investors who hold off from buying may be offered an even cheaper ticket sometime in the near future.
