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Why Webjet Limited’s share price flew higher today

Credit: Roger Schultz

Shares of online travel agency Webjet Limited (ASX: WEB) surged as much as 6.2% today after it upgraded its profit guidance for the 2016 financial year (FY16).

In its update to the market, Webjet said it expected to achieved $33.5 million of earnings before interest, tax, depreciation and amortisation (EBITDA) for FY16, representing growth of 20% on FY15. It said this number “reflects the fact that all of our business units are exhibiting strong growth”, in part driven by its technology, marketing and development plans.

The figure is also considerably higher than the consensus $30.8 million forecast by analysts, as highlighted by the Fairfax press, and comes after the company expensed a $3 million investment in its digital B2B business in Europe and North America.

The shares hit a new all-time high of $5.35 following a two-year dip, while they’re up nearly 79% since the beginning of the financial year.

Comments from the company’s managing director, John Guscic, have likely also played a role in the company’s strong gains today. He said total transaction value had grown at more than 15% so far this year with online bookings exceeding the market by more than five-fold. Cost reductions have also been made across the business.

Fellow travel agent business Flight Centre Travel Group Ltd (ASX: FLT) has also risen 0.8% today following its own annual general meeting, where it said July-October trading was in line with expectations.

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Motley Fool contributor Ryan Newman 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. You can follow Ryan on Twitter @ASXvalueinvest.

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.

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