The share price of Webjet Limited (ASX: WEB) flew up to $13.35 this morning, but finished up by 3.5% to $12.88.
The last few weeks have been good for the Webjet share price after the collapse of Thomas Cook. It is up 18% since the start of October when I named it my best pick.
At its AGM today the company gave earnings guidance. In the first half of FY20 the company is expecting to report underlying earnings before interest, tax, depreciation and amortisation (EBITDA) of at least $80 million, which would represent growth of 37%.
For the FY20 year the company expects underlying EBITDA, which excludes one off revenue, one off costs and the impact of AASB16, to be between $157 million and $167 million. This would represent growth of approximately 26% to 34% with organic EBITDA growth of 16% to 23%.
Webjet re-iterated it believes it can hit its profitability targets with WebBeds of revenue being 8% of total transaction volume (TTV) and costs being 4% of TTV, resulting in EBITDA being 4% of TTV and an effective EBITDA margin of 50%.
Whilst Webjet may not be in the sexy 'software as a service (SaaS) space' with recurring revenues, a large portion of its operations are technology based – it's very scalable, particularly if it can effectively rollout its Rezchain blockchain solution to the travel industry.
Despite the decent recovery of the Webjet share price, FY21 and beyond could make today's share price seem cheap when the Thomas Cook affair won't be a negative for next year's result.
Foolish takeaway
Webjet is trading at 15x FY21's estimated earnings with a grossed-up dividend yield of 2.4%. I still think it looks good for long-term value, although it's not quite as good value as it was earlier this month.
