Why the Webjet Limited share price has hit turbulence

Webjet Limited (ASX:WEB) shares were up 3.6% supported by a strong earnings outlook. 

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Corporate travel jet flying into sunset

A few days ago Webjet Limited (ASX: WEB) announced that Bloomberg incorrectly reported a softening of the FY18 guidance that the company provided on 22 February 2018.

Webjet was up 3.6% to $11.1o on Tuesday. The company is not a dividend play paying a trailing yield of 1.7% per annum (pa), trading on a forward PE ratio of 28.8 based on JB Were’s EPS forecast of $0.40 cents.

Webjet Limited’s 1H18 has gone according to plan with net profit after tax up 25%.

Flight bookings and WebBeds are driving growth. A range of higher revenue margin anxillary products offered by the company including hotels, car hire, travel insurance, cruise, motorhomes and packages are growing in aggregate faster than flights.

Bapcor Ltd (ASX: BAP) is in the same sector as Webjet, but is focused on the distribution of automotive aftermarket parts. Recently, Morgan Stanley its overweight rating and $7.00 price target on Bapcor’s shares. Earnings per share is expected to be 31 cents a share in FY18, rising to 36 cents per share in FY19. One year performance is up 9% to $5.80 trading on a forward PE ratio of 16x FY19 earnings.

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Motley Fool contributor Rosemary Steinfort has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Webjet Ltd and owns shares in Bapcor Ltd. 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 Scott Phillips.

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