Owning Flight Centre Travel Group Ltd (ASX: FLT) shares has been an incredibly volatile time over the past decade, as the chart below shows.
Flight Centre is a major travel agent business for both consumers and corporates. It has a global presence including Australia, New Zealand, the UK, Canada, South Africa, the US, Hong Kong, China, Singapore and UAE.
COVID-19 significantly disrupted Flight Centre's earnings and now the company's earnings has returned following a recovery in travel as well as a few targeted acquisitions. Let's take a look at analyst forecasts for the business. Could profit growth help send the Flight Centre share price higher?
FY26
The business recently acquired a cruise leisure business called Iglu, increasing its exposure to that growing segment – it now represents around $2 billion of total transaction value (TTV) for the company. Iglu is the leading cruise agency in the UK, according to UBS.
UBS said its preliminary analysis suggests "5%-6% EPS [earnings per share] accretion in FY27/FY28, assuming cruise grows at 7%" per annum.
This should help the ASX share's margins as Iglu comes with an operating profit (EBITDA) to total transaction value (TTV) margin of 3.1% compared to 2.2% for the Flight Centre leisure segment, with another £12.1 million of expected synergies within two years.
If Flight Centre manages to achieve its cruise 'stretch target' of $3 billion in FY28, UBS predicts this would increase the forecast FY28 net profit after tax (NPAT) by another 6%.
However, a shift in the outlook for Australian interest rates since the AGM, creates a "more challenging outlook for the leisure business." But, the outlook for additional new business wins within the corporate segment has "arguably increased" and ongoing productivity initiatives "should continue to drive efficiency improvements".
UBS predicts EPS could rise at a compound annual growth rate (CAGR) of 18% between FY26 to FY29.
The broker notes that Flight Centre increased its underlying profit before tax (PBT) guidance by $10 million to $315 million to $350 million for FY26.
Owners of Flight Centre shares could see their business generate $230 million of net profit in FY26, according to UBS, putting the valuation at 14x FY26's estimated earnings.
FY27
UBS projects that the business could generate $281 million of net profit in the 2027 financial year as the situation plays out as the broker expects, which I covered above.
FY28
In the 2028 financial year, Flight Centre's net profit is projected to increase to $330 million, representing another double-digit increase in percentage terms.
FY29
Profit growth could start slowing down in the 2029 financial year, according to the forecast from UBS.
In FY29, Flight Centre's earnings could rise to $361 million.
FY30
In the 2030 financial year, owners of Flight Centre shares could see the net profit improve to $385 million.
If that happens, it would mean a possible rise of net profit of 67% between FY26 and FY30.
