The Helloworld (ASX:HLO) share price is up 36% in a month. Here’s why

Shares in the travel agency group are flying higher as the reopening of international borders looms…

| More on:
a family of parents with two children ride an airport trolley with luggage and tourist trappings such as field glasses with excited expressions on their faces.

Image source: Getty Images

The Helloworld Travel Ltd (ASX: HLO) share price has been flying under the radar.

In the past month, shares in the travel agency group have surged more than 36%. At the time of writing, they are trading 1.4% higher for the day at $2.18.

Let’s take a look at what’s been fuelling the Helloworld share price.

Helloworld share price propelled by travel hopes

Along with the broader travel sector, shares in Helloworld are flying higher on renewed hopes of travel in the near future.

Despite the Delta variant of COVID-19 causing major domestic and international travel disruptions, investors have been looking towards a vaccinated future.

As a result, investors have flocked to travel shares as the resumption of domestic and international travel looms. This has helped to push up the Helloworld share price.

The effects of border closures and travel restrictions were recently reflected in the company’s full-year report for FY21.

How did Helloworld perform in FY21?

Late last month, Helloworld released preliminary un-audited results for the year ended 30 June 2021.

This was followed by the company’s annual report, released earlier this week.

For FY21, Helloworld reported a statutory after-tax loss of nearly $36 million.

The travel agency group revealed it had lost 272 agencies over the past 15 months as lockdowns took their toll on the company.

Highlights from the company’s full-year report included;

  • Underlying earnings before interest, taxes, depreciation, and amortisation (EBITDA) loss of $14.1 million. This was at the low end of the range indicated in the Quarter 3 trading update ($14 million to $16 million).
  • FY21 underlying loss before tax of $37.8 million after one-off costs of $11.7 million.
  • $131.0 million cash balance at 30 June 2021.

Helloworld’s total transaction values (TTV) tanked 78.4% for the financial year to $1.08 billion.

The Helloworld share price jumped on the back of the result and has been climbing ever since.

The company was unable to provide guidance for FY22, due to the uncertainty around the lifting of border restrictions and travel bans.

However, the travel agency did note that strong demand for travel during periods of open travel reflected pent-up consumer demand.

As a result, Helloworld noted the company was focusing on vaccine rollouts to determine the re-opening of domestic and international borders.

Snapshot of the Helloworld share price

The Helloworld share price has reflected the company’s challenging trading conditions in 2021.  

Despite shares in the travel agency rallying in the past month, they remain around 13% lower since the start of the year. However, they have gained around 18% in the past 12 months.

Should you invest $1,000 in Helloworld right now?

Before you consider Helloworld, you'll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Helloworld wasn't one of them.

The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of August 16th 2021

Motley Fool contributor Nikhil Gangaram has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Helloworld Limited. The Motley Fool Australia owns shares of and has recommended Helloworld Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Share Gainers