3 things that could make Flight Centre Travel Group Ltd ready to take off again

Domestic and international store expansion is driving earnings

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The flight reservations and travel bookings operator Flight Centre Travel Group Ltd (ASX: FLT) is down about 9% since late April, coinciding with the ACCC case penalty ruling put out concerning alleged price fixing. The company plans to appeal the $11 million penalty.

Excluding significant items, the company still is projecting an increase of 8%-12% for full year FY2014 underlying net profit before tax on the previous corresponding period.

For long-term investors, this dip in share price could be seen as a little discount from a temporary situation as earnings continue to grow.

The company still has much to offer in the way of business potential.

Store network expansion

In the first half of FY2014, the company opened its 2500th shop. It modified its store franchise model and worked on bringing more independent agencies within its business network.

It also pushed ahead with its new hyperstore format rollout in Australia, the UK and the US. In May 2013, with new store growth and acquisitions, the company now has 2660 stores worldwide.

Corporate travel business growth

The company’s FCm Travel Solutions handles the business traveler trip management. It accounts for about 25% of its Australian revenue and can have higher earnings margins than regular flight bookings. In its US business, it accounts for almost 50% of turnover, so earnings potential is good as it expands internationally.

To beef up its UK corporate travel, it recently agreed to acquire Travelplan Corporate Limited, a corporate travel business in Ireland. It has been a part of the FCm Travel Solutions network for a number of years and will give Flight Centre a low-risk entry into Ireland.

Business performance

Record results were achieved in the interim, with underlying net profit up 14% and 8.2% store growth in the twelve months up to 31 December 2013. Half year revenue was up 15%.

Investors looking for stable growth from a well-established company can find it here. Rather than losing out to online travel agencies like Webjet Limited (ASX: WEB) or holiday/accommodation bookings sites like Wotif.com Holdings Limited (ASX: WTF), it put itself into high gear and kept its market-leader status with impressive growth.

Motley Fool contributor Darryl Daté-Shappard does not own shares in any company mentioned. 

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