The Corporate Travel Management Ltd (ASX: CTD) share price could be a leading idea to consider at the current price.
Analysts at the broker Morgans currently rate the ASX travel share as a buy, with a price target of $27.36.
That price target implies that Corporate Travel shares could rise by close to 10% over the next 12 months, if the broker is correct.
A return to profitability
One of the things that was noted by the broker is that the large corporate travel business has already returned to making an operating profit, unlike some of its ASX travel share peers.
In the first half of FY21, Corporate Travel Management processed $403.8 million of total transaction value (TTV), it made $74.2 million of revenue and the underlying earnings before interest, tax, depreciation and amortisation (EBITDA) was a loss of $15.3 million.
But profitability returned in the fourth quarter of FY21 where the business processed $821.5 million of TTV on $74.1 million of revenue, whilst underlying EBITDA came in at $13.6 million.
Management noted that the annualised fourth quarter revenue recovered to over 41% of the pro forma number from the 2019 calendar year. It has a majority exposure to regions with the most recovery momentum, being North America and the European Union.
Profit continues into FY22
The Corporate Travel Management share price may be influenced by the company's recent trading update that showed profitability is continuing in FY22. North America, Europe and ANZ all continued making a profit in the first quarter of FY22.
The ASX travel share said that for September 2021, 83% of group revenue was generated from North America and the EU.
Profitability allows the business to re-invest back into the technology and people needed to service clients through the recovery.
The company says that its value proposition of expert service, innovative technology and return on investment is more relevant in today's complex recovery environment.
It's winning market share through an "enhanced global reputation" in this era.
The business that it has won is expected to deliver "above market growth" through the recovery phase and beyond.
Acquisition strategy
The acquisition of Travel & Transport has helped, making the ASX share one of the largest corporate travel businesses in the world. Management have calculated that its pro forma revenue and underlying EBITDA will be 57% higher compared to FY19 on a full recovery basis. It's estimated to now be the fourth largest travel manager in the world.
Corporate Travel Management is continuing to assess acquisition opportunities that fit its strategy.
Corporate Travel Management share price valuation
Using Morgans' numbers, its shares are priced at 68x FY22's estimated earnings and 27x FY23's estimated earnings.
