Why the Helloworld Ltd share price has surged higher today

The Helloworld Ltd (ASX:HLO) share price has jumped following the release of its half-year results. Should you snap up its shares?

| 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

The Helloworld Ltd (ASX: HLO) share price has been a big mover in morning trade after the travel company released its half-year results.

In morning trade its shares are 6.5% higher at $4.15.

Key takeaways from the release include:

  • Total transaction value (TTV) was $2,661.9 million, an increase of $55.9 million or 2.1%.
  • Revenue increased 23.2% to $171.2 million.
  • Earnings before interest, tax, depreciation, and amortisation (EBITDA) increased 270.3% to $30.1 million.
  • Net profit after tax was $12.9 million, compared to a loss of $1.7 million in the prior corresponding period.
  • Diluted earnings per share were 11.3 cents.
  • Fully franked 6 cents per share dividend, payable March 20 2017.
  • Reconfirmed FY 2017 guidance of EBITDA between $47 million and $51 million.

According to the release Helloworld's TTV was down due to lower airfare prices, with domestic airfares falling 4% and international airfares down 12% during the half.

But thanks to TTV margin improvements and increasing ticketing volumes the company was able to more than offset the decline, resulting in impressive revenue growth of 23.2%.

The acquisition of AOT Group was also a key reason why revenue grew strongly in its Wholesale/Inbound segment. Thanks to a strong contribution from AOT, revenue in the segment almost doubled to $69 million.

Pleasingly management revealed that initiatives between Helloworld and AOT wholesale brands delivered improved margins and reduced costs.

But the company's Travel Management segment was the highlight in my opinion. During the half TTV and revenue grew 6.2% and 10.7%, respectively.

The segment's strong performance was driven largely by new business from the Northern Territory government and PricewaterhouseCoopers,

Is it a buy?

After today's jump in its share price its shares are changing hands at approximately 20x trailing earnings.

Whilst I think the result was a solid one, I think its shares are fully priced now and offer limited upside potential.

In light of this I see far more value in rivals Webjet Limited (ASX: WEB) and Flight Centre Travel Group Ltd (ASX: FLT) at present and would favour an investment in them ahead of Helloworld.

Motley Fool contributor James Mickleboro has no position in any stocks mentioned. 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 »