What's going on with Flight Centre shares today?

Investors have given Flight Centre's results a lukewarm response.

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The Flight Centre Travel Group Ltd (ASX: FLT) share price is having a volatile session.

After being up almost 2% to $22.47 in early trade, the travel agent's shares have given back their gains and dropped into the red.

At the time of writing, Flight Centre's shares are down slightly to $22.04.

What's going on with Flight Centre shares?

Flight Centre shares are having a subdued session following the company's full-year results release.

Although the company delivered a strong result, there were no real surprises given that it released a trading update last month.

For the 12 months ended 30 June, Flight Centre posted a 127% increase in revenue to $2,281 million and underlying earnings before interest, tax, depreciation, and amortisation (EBITDA) of $302 million. The latter was a $485 million turnaround from an EBITDA loss of $183 million a year earlier and in line with guidance.

In light of this turnaround, the Flight Centre board has brought back its dividend. And while its fully franked final dividend of 18 cents per share may not be much to get excited about right now, it could change in FY 2024 and beyond.

Flight Centre's final dividend is the equivalent of a 0.8% dividend yield. But moving forward, the company intends to allocate 50% to 60% of net profit after tax to dividends and/or share buy-backs.

A recent note out of Citi reveals that it is forecasting earnings per share of 97 cents in FY 2024 and 132 cents in FY 2025. If this proves accurate, then with a 60% payout ratio, dividends per share of 58.2 cents and 79.2 cents could be coming over the next two financial years. That's the equivalent of 2.65% and 3.6% dividend yields.

However it is worth noting that Citi has not updated its financial model to reflect today's results, so its estimates could change in the coming days.

What's next for Flight Centre?

Management hasn't offered any guidance for FY 2024 with its results. Instead, it intends to provide earnings guidance at its annual general meeting in November.

However, it did comment that "we have seen further solid TTV and profit growth in early trading in a resilient travel market that seems to be holding up reasonably well compared to other sectors."

Citigroup is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Flight Centre Travel Group. 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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