Up around 750% over the past five years the Corporate Travel Management Ltd (ASX: CTD) share price has probably been the best performing growth stock amongst the small-to-mid-cap ASX businesses in recent time.
Today the group reported its results for the six-month period ending December 31 2016. Below is a summary of the results, with comparisons to the prior corresponding half.
- Revenue and other income of $150.5m, up 26%
- Total transaction value (TTV) of $1,870m, up 9%
- Statutory net profit of $22.1m, up 28%
- Earnings per share of 22.1cps, up 24%
- Adjusted earnings per share 27.3 cps, up 51%
- Underlying EBITDA of $40.4m, up 45%
- Dividend payable 12 cps, up 33%
- Guidance for FY17 EBITDA at top end of guidance or $97m
This is another impressive result from a business with a relatively simple model that continues to deliver a mix of strong organic and acquisitive growth. In fact organic growth was up a whopping 29% for the period when excluding acquisitions, which is a reminder that this is at its heart a sales driven client-facing business taking market share in the global markets in which it operates.
The business also faced a couple of headwinds over the period in terms of falling airfare prices (impacting TTV) and the appreciating Australian dollar on the back of rebounding commodity prices. Still the mining recovery may be a double-edged sword in assisting Corporate Travel's ANZ business over calendar year 2017 as a lot of its clients are in the regional mining and mining-services industries.
The group's developing U.S. operations also appear to be performing well thanks to the acquisitive growth strategy and it also looks leveraged to an uptick in U.S. economic growth that is already materialising with room to run over the year ahead.
The company has also moved into Europe via acquisitions in the UK in recent times and the business appears to be performing well although it remains small for now, with its Asia business underperforming in part due to falling airfare prices.
Falling airfare prices are a factor Corporate Travel's rival Flight Centre Travel Group Ltd (ASX: FLT) has commonly blamed for its disastrous performance over recent times. Given the way the two companies are travelling in the opposite direction it may not be so preposterous to think that one day Corporate Travel may grow into a larger market value than its famous rival.
Insider Ownership
Importantly for investors this is a company with heavy insider share ownership indeed its founder and CEO Jamie Pherous owns around 22% over the company, with other senior staff members retaining significant shareholdings and participating in the recent renounceable capital raising to acquire Redfern Travel.
Heavy insider ownership of shares within a high-quality company is a rare quality among ASX listings that should appeal to every smart investor. Another business worth looking at boasting these qualities on an attractive valuation is tech operator TPG Telecom Ltd (ASX: TPM).
Outlook
Given the strong US economy and mining recovery in Australia the stars could be aligning for Corporate Travel in 2017 and its chief executive painted a bullish picture on today's conference call regarding FY 2018 and beyond.
This is a business forecast to grow EBITDA at 40.6% for the full year FY 17 that trades on an estimated forward earnings multiple of around 31x, which would give it a price-to-earnings-growth ratio of well under 1 using conventional metrics to value growth stocks.
As I have written before it is often the simple businesses executing well that deliver the most gangbusters growth and Corporate Travel and its sales-driven focus underpinned by some strong client-serving technology appears to be delivering.
As the CEO said "everything we flag we tend to execute" and given the headwinds facing the business (FX and airfare falls) may lighten in the years ahead this looks a business that could keep executing to deliver earnings growth and share price gains.
Given today's result and the strong outlook I rate the stock as a buy at $18.50.
