Here’s why the Webjet share price is going gangbusters again today

The Webjet Limited (ASX: WEB) share price is up 10.4% today after climbing nearly 30% yesterday in a parabolic move driven by a better-than-expected profit report yesterday.

Webjet will be familiar to most readers via its eponymous consumer-facing package holiday, travel services and flight bookings website, although it’s the profit growth of its business-to-business operations that is catching the eye of the market.

Overall for the half year Webjet reported a net profit (before acquisition amortisation) of $38.3 million on total transaction value (TTV) of $1.75 billion that translated into revenue of $175.3 million.

Its WebBeds business managed to double EBITDA (operating income) on a like-for-like basis over the period to $28.2 million as it booked a powerful combination of strong TTV and profit margin growth. Moreover, management is forecasting more strong growth out to FY 2022 in terms of revenue, margins and TTV.

The WebBeds business now represents around half of group EBITDA and acts like a digital middleman between hotel operators (etc) and travel companies that like to block book hotels for tour groups at steep discounts.

This is still big business in the global travel industry especially for example with the rise of Chinese travellers who still prefer to travel in groups (rather than independently) as it’s cheaper among other perceived benefits. On top of this is the fact that travel industry per capita growth continues to outpace general economic growth, which is another tailwind for travel service providers.

Company factors aside it’s also likely sell side analysts have offered improved “share price targets” on the business today.

Thanks to Webjet’s robust outlook and the continued growth of its consumer-facing website it stock could have room to run yet alongside the likes of Flight Centre Travel Group Ltd (ASX: FLT) and Corporate Travel Management Ltd (ASX: CTD).

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Motley Fool contributor Tom Richardson owns shares of Webjet Ltd.

You can find Tom on Twitter @tommyr345

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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