It's been a rocky ride for shareholders in online travel agents Wotif.com Holdings Limited (ASX: WTF) and Webjet Limited (ASX: WEB) with both companies witnessing a decimation of their share price over the past 12 months, with falls of 47% and 46% respectively. In contrast the S&P/ASX 200 Index (Index: ^AXJO) (ASX: XJO) has managed to gain 14% – that's underperformance of around 60%!
In the case of Wotif.com, the dramatic fall in share price last December was in response to a profit downgrade which ultimately saw net profit fall 18% for the half year. The market has appeared to take this as a sign that Wotif.com is now 'ex-growth', and de-rated the stock in response.
For yield hungry investors the fall in Wotif.com's share price and de-rating to 'ex-growth' status could offer a potential opportunity.
With a solid balance sheet which is in a net cash position and boasting market leading operating metrics, the key factor for potential investors is to determine if the current level of Wotif.com's earnings and dividends are maintainable.
According to consensus data from Morningstar Research it would appear they could be. Financial Year (FY) 2014 is forecast to be the low with earnings per share (EPS) of 20 cents per share (cps) and a dividend of 18.7 cps. FY 2015 is forecast to see a rise in EPS to 21.2 cps and dividends to 19.5 cps. While in FY 2016 EPS are forecast to rebound to 24.2 cps and the dividend to 20.5 cps.
Based on these numbers, investors buying today could expect to receive a seriously appealing fully franked dividend of 8.2% in FY 2016!
This yield is favourable compared with both the market leader Flight Centre Travel Group Ltd (ASX: FLT) which trades on a yield of around 4% and importantly is also more appealing than many other high yielding stocks which may not be as successful in maintaining their current level of dividends.
