Why Flight Centre Travel Group shares look like a winning bet

Flight Centre Travel Group Ltd (ASX:FLT) has an exceptional track record.

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Long term shareholders in leading travel agent Flight Centre Travel Group Ltd (ASX: FLT) have certainly experienced incredible market beating returns.

Over the past five years the share price has doubled, whilst over the past decade, the share price has increased 271%.

In comparison, the gains from the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) have been just 11% and 3.5% over the same respective time frames.

Exceptional past performance

Here are a few highlights from Flight Centre's journey over the past 20 years as an ASX listed company…

  • Compound average growth rate (CAGR) in total transaction value (TTV) of 16.5% per annum (pa)
  • TTV has exceeded the previous corresponding period 19 times
  • CAGR in profit before tax of 16.9% pa
  • $1.34 billion has been returned to shareholders in fully franked dividends

The past has obviously been spectacular but the future looks bright too

Flight Centre is now not just a major provider of retail travel services but it is also one of the world's largest corporate travel managers.

The group has also expanded far beyond its domestic market with almost half of TTV and one-third of sales now generated in the Americas and Europe.

The group is rolling out a new instore experience of hyper and mega stores which Flight Centre has found are more productive, have higher morale and deliver a vastly improved customer experience.

Foolish Takeaway

For a company with such a superb operating history and with positive future growth prospects it would be reasonable to expect the stock to trade at a premium or at least in line with the market average.

Surprising at today's share price the stock trades on a trailing price-to-earnings (PE) multiple of 16.7 times which represents a discount to the market.

Motley Fool contributor Tim McArthur has no position in any stocks mentioned. Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »