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Is this mid cap growth star a must buy after its bumper profit result?

In morning trade the Helloworld Travel Ltd (ASX: HLO) share price has edged higher following the release of the travel company’s full-year results for the 12 months ended June 30.

In FY 2018 Helloworld achieved Total Transaction Value (TTV) growth of 3.5% to $6.1 billion, underpinned by strong air ticket sales volume growth. Although revenue remained flat at $326.9 million due to the impact of lower airfares, the company delivered a 48.1% increase in profit after tax to $32 million.

Diluted earnings per share rose 43.9% during the year to 26.9 cents. This allowed the Helloworld board to declare a final dividend of 11 cents per share, bringing its full-year dividend to 18 cents per share. Which was a 29% increase from 14 cents per share in FY 2017.

The significant jump in profits was driven by the company’s focus on profitable revenue streams and cost control to right size the cost base. This led to its EBITDA margin expanding from 16.9% last year to 20% in FY 2018.

Pleasingly, management isn’t about to rest on its laurels. It remains focused on growing revenue margins, cost reduction, and extracting further efficiencies in its business to improve profitability. Furthermore, Helloworld completed a number of strategic business acquisitions during the second half of FY 2018, the benefits of which are expected to be reflected in its FY 2019 results.

Speaking of which. In FY 2019 management has provided EBITDA guidance in the range of $76 million and $80 million. This will be an increase of between 16.5% and 23% on FY 2018’s result. The guidance is subject to no material and unexpected deterioration in operating conditions or material unforeseen adverse events.

Should you invest?

With its shares changing hands at just 17x earnings, I continue to believe that Helloworld is one of the best options in the travel industry along with Corporate Travel Management Ltd (ASX: CTD) and Webjet Limited (ASX: WEB).

As well as Helloworld, growth investors might want to take a look at these top mid cap growth shares.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Corporate Travel Management Limited. The Motley Fool Australia owns shares of Helloworld Limited. The Motley Fool Australia has recommended Webjet 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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