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Is the Sydney Airport share price in the buy zone?

The Sydney Airport Holdings Pty Ltd  (ASX: SYD) share price is up 20.15% so far this year to $7.99 per share – but is there still time to buy?

How has the Sydney Airport share price performed?

The Sydney Airport share price has been a strong performer over a sustained period of time, as its domestic and international travel numbers have steadily expanded.

Over the last 5 years, the Sydney Airport share price has nearly doubled, and that’s before you consider the 4.82% per annum dividend yield that the company offers its shareholders at the moment.

What did Sydney Airport report in its HY19 results?

The Aussie airport operator reported a 90% fall in net profit after tax after a $181.7 million Danish tax bill ate into the company’s statutory results.

Sydney Airport reported half-year revenue up 3.4% on the prior corresponding period (pcp) to $797.1 million on the back of strong growth from its Aeronautical and Retail divisions.

The company’s earnings before interest, tax, depreciation and amortisation (EBITDA) climbed 4.1% higher on pcp to $649.2 million despite a 0.2% drop in passenger numbers to 21.6 million.

How does it compare to its peers?

Given how niche the company’s operations are, the best comparison on the ASX is probably Auckland International Airport Ltd  (ASX: AIA).

The New Zealand-based airport operator’s $10.5 billion market cap is below that of Sydney Airport ($18.1 billion) but operationally is the most similar to the Aussie group.

It’s been a similar story in terms of share price growth, with the Auckland International Airport share price up 26.7% in 2019, albeit with half the dividend yield at 2.21% p.a.

The Sydney Airport share price looks relatively pricey at 45x earnings, and given Auckland International Airport shares trade at 21x earnings by my calculations, it may not be the best value on the market at the moment.

Is Sydney Airport in the buy zone?

Despite its relatively lofty valuation, the Sydney Airport share price could still be worth a look in 2020.

In my view, the technical environment remains strong with the low-interest-rate environment and potential for further cuts creating the possibility for a spending boost in the economy.

With more discretionary income comes the potential for higher travel numbers, and this could see traffic increase through the Sydney Airport travel hub.

While 45x earnings is a little pricey, the high dividend yield provides strong income in the meantime and could make it a good long-term buy-and-hold play for the right portfolio.

If you're looking for good value on the ASX, these 5 winners could be worth a look before the end of the year.

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Motley Fool contributor Kenneth Hall has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Sydney Airport Holdings Limited. 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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