Wilsons gives its verdict on Webjet and these popular ASX 200 stocks

Did these companies deliver the goods this month? Let's see what the broker thinks.

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Earnings season is traditionally in February and August. However, not all ASX 200 stocks operate with the standard financial calendar.

As a result, this month there have been a number of result releases from popular companies.

The team at Wilsons has been running the rule over these updates and has given its verdict on them and their shares. Let's see what the broker is saying about three stocks:

Aristocrat Leisure Limited (ASX: ALL)

Wilsons was impressed with this gaming technology company's performance during the first half of FY 2024. It said:

Aristocrat's (ALL) 1H24 result was an impressive, double-digit beat to consensus earnings expectations, which demonstrated the quality of the business underpinned by its ability to consistently gain market share.

And with management speaking positively about the ASX 200 stock's outlook, Wilsons thinks that its shares could still be cheap. It adds:

ALL is still 'cheap' despite its recent rally with the company trading on a forward PE of ~18x. This multiple is attractive given ALL's competitive strengths and the long runway for double-digit EPS growth, underpinned by continued share gains in land-based gaming and the accelerating performance of Aristocrat Interactive within the fast-growing real money gaming industry.

Webjet Ltd (ASX: WEB)

Another ASX 200 stock that impressed the broker this month was online travel agent Webjet.

While it was pleased with its performance in FY 2024, the thing that really caught its eye was its plan to demerge the WebBeds business. It said:

WEB reported FY24 full year EBITDA growth of +40% to $188m, which was towards the top-end of the company's $180-190m guidance range and broadly in line with expectations. The major news however was WEB's plans to demerge its B2B (WebBeds) and B2C segments (principally Webjet.com.au) into two separately ASX-listed companies in FY25.

Wilsons believes that the market is undervaluing the WebBeds business and appears to believe that the demerger will unlock this value. It explains:

To estimate the current 'implied' market valuation of WebBeds, we have conducted a sum-of-the-parts analysis of the combined WEB group. Our analysis assumes that Webjet OTA will trade on an FY25e EV/EBITDA multiple of ~8.6x – directly in line with the global peer average. Presuming this is accurate, WEB's headline market multiple of ~13x implies WebBeds is valued at an implied FY25 EV/EBITDA multiple of ~15x – well below the average comp multiple of ~26x. This suggests that WebBeds is undervalued by the market in the current group structure. As such, we are confident that the proposed demerger, if successful, is likely to drive a re-rate of WebBeds valuation multiple (and thus WEB's sum-of-the parts multiple), unlocking 'hidden value' for WEB shareholders.

Xero Ltd (ASX: XRO)

Finally, this cloud accounting platform provider is another ASX 200 stock that impressed this month with its results. It commented:

Xero's (XRO) FY24 result was an impressive beat to consensus expectations, which has strengthened our conviction in our investment thesis. In the result, XRO showcased its ability to balance top line growth with profitability following recent cost outs. Notably, the company achieved its 'rule of 40' target several years earlier than expected by the street, with revenue growth of +22% and a free cash flow margin of 20%.

Based on this performance and its positive long term growth outlook, the broker feels that Xero's shares are attractively priced. Particularly given its potential to outperform consensus estimates. It adds:

In summary, we expect continued double-digit subscriber growth, combined with price increases and a leaner cost base, to underpin significant long-term earnings growth that is not fully appreciated by the market in our view. Therefore, despite XRO's high forward PE multiple of ~78x, the company still offers attractive value at current levels considering consensus EPS growth of ~34% p.a. (CAGR) to FY30 with potential for upgrades on top of this.

Motley Fool contributor James Mickleboro has positions in Xero. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Xero. The Motley Fool Australia has positions in and has recommended Xero. 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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