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Why the Webjet share price soared 11% higher today

The Webjet Limited (ASX: WEB) share price soared higher today by almost 11% after reporting its half-year result to 31 December 2019.

Webjet’s pleasing profit numbers

As expected, Webjet reported a mixed set of results. The statutory numbers were down because of the Thomas Cook collapse, but the underlying numbers (which excludes one-offs) were very good.

Total transaction value (TTV) was up 25% to $2.33 billion. Revenue went up 24% to $217.8 million.

Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) jumped 43% to $86.3 million with the underlying EBITDA margin improving by 523 basis points, or 5.23%, to 39.6%.

WebBeds was the key driver of this operating strong result with bookings up 53%, TTV up 42%, revenue up 50% to $127.5 million, EBITDA up 81% to $57.3 million and the EBITDA margin improving by an excellent 775 basis points (7.75%) to 45%.

The Webjet OTA result was still okay with bookings up 1%, TTV up 3%, revenue up 1% and EBITDA flat.

Webjet’s underlying net profit rose by 36% to $43.2 million and underlying earnings per share (EPS) increased by 22% to 31.9 cents.

However, due to the one-off write-off of $44 million of unpaid receivables because of Thomas Cook, statutory net profit fell by 64% and statutory earnings per share (EPS) dropped 68%.

The strength of the balance sheet and cash conversion allowed Webjet to declare an interim fully franked dividend of 9 cents per share, which was an increase of around 6%.

Outlook

Webjet is now expecting its FY20 underlying EBITDA to be between $147 million to $165 million, which would be growth of 14% to 28% because of the coronavirus, which is expected to reduce second-half EBITDA by between $7 million to $15 million.

However, I think that FY21 could be an exciting year assuming no other disruptions to earnings. It’s trading at 15x FY21’s estimated earnings – this looks cheap if it isn’t acquired before FY21. There was talk of a takeover before the coronavirus hit the global travel industry. 

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. 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.