Qantas Airways Limited (ASX: QAN) shares have been in full flight this year.
Since the turn of 2024, the airline operator's shares have risen 16%. This is more than triple the market return over the same period.
So, with the Flying Kangaroo's FY 2024 results due to be released next Thursday (29 August), the market is likely to be looking for a big profit.
But how much is that? Let's take a look at what analysts are forecasting from Qantas next week.
FY 2024 results preview
According to a note out of Goldman Sachs, it is expecting Qantas to report revenue of $22,131.1 million in FY 2024. This will be up 11.7% year on year.
However, due to a 17.7% increase in its cost of goods sold to $18,094.7 million, Qantas' earnings are expected to be lower compared to FY 2023 levels.
Goldman has pencilled in EBITDA of $4,036.4 million (down 9.2%), pre-tax profit of $2,001.5 million (down 18.8%), net profit before one-offs of $1,412.1 million (down 18.8%), and diluted earnings per share of 85 cents.
The broker doesn't believe that there will be any dividends this year, but it does expect them to return in FY 2025. It has pencilled in a 30 cents per share dividend for that year (and FY 2026).
Should you invest?
Goldman Sachs is very bullish about Qantas and sees plenty of value in its shares.
It currently has a buy rating and $8.05 price target on its shares. Based on its current share price of $6.20, this implies potential upside of 30% for investors over the next 12 months.
Its analysts believe the market is undervaluing the company's structurally stronger earnings. It said:
We expect QAN's earnings capacity to structurally improve (due A$1b+ cost out program), with FY24e PBT 51% ahead of pre-COVID levels. In addition, current ongoing customer investment is gaining traction (improved operating performance), alleviating concerns and key downside risk. The discounted valuation versus peers and its own history implies that the market is pricing in a trade off between investment (fleet and customer) and capital returns (dividends & buybacks), which we view as a buying opportunity.
It then concludes:
QAN is trading 4% below pre-COVID market capitalization with the enterprise value still 7% lower despite a structurally improved earnings capacity. Relative to regional/ US peers (median PE of 9.1x), QAN is trading on a 29% discount at 6.4x FY25 PE. This is more than 2x below the historical 5Y average discount of 14%. We expect this gap to narrow as QAN delivers earnings that are sustainably above pre-COVID levels and demonstrates ability/ willingness to distribute capital to shareholders while renewing the fleet. Retain Buy.
