The Webjet Limited (ASX: WEB) share price has been amongst the best performers on the ASX 200 on Wednesday.
In morning trade the online travel agent’s shares raced as much as 10% higher to $13.70.
They have since pulled back a touch but are still up 7% to $13.30 at the time of writing.
Why is the Webjet share price on fire today?
Investors have been buying Webjet’s shares following the release of its annual general meeting presentation ahead of its event in Melbourne.
As well as breakdown on its FY 2019 performance, the presentation included a trading update and its expectations for the full year.
How is Webjet performing in FY 2020?
Webjet’s managing director, John Guscic, revealed that the company has started FY 2020 in a positive fashion.
Financial year-to-date, excluding any Thomas Cook prior or current year contribution, the key WebBeds business continues to grow TTV, revenue, and EBITDA in all regions.
Elsehwere, although it is facing challenging trading conditions, the Webjet OTA business is performing well and continues to outperform market flight bookings growth.
Things are not quite as positive for the New Zealand-based Online Republic business. While Cars and Motorhomes are both performing well and continue to grow, the Cruise vertical continues to be impacted by reduced capacity and loss of share.
A turnaround strategy has been initiated, but management expects first half Online Republic EBITDA to be lower year on year. A stronger second half is forecast, leading to flat segment EBITDA for the year.
Thanks to the growth of the WebBeds business, the company is seeing significant improvements in EBITDA margins across its business.
In light of this, it remains on track to deliver its profitability target of 8/4/4 by FY 2022.
Mr Guscic explained: “This will mean 8% Revenue/TTV margin and 4% costs/TTV margin, will deliver a 4% EBITDA/TTV margin, which translates to a 50% EBITDA margin.”
The Rezchain blockchain solution is also playing a key role in helping deliver this target by driving efficiencies across the business and helping reduce costs.
First half underlying EBITDA is expected to be at least $80 million, up from $58 million for the same period last year. This represents an increase of more than 37%.
And for the full year, management expects FY 2020 underlying EBITDA, which excludes one-off revenues and costs and the impact of AASB16, to be between $157 million and $167 million.
This represents growth of approximately 26% to 34% over FY 2019. It also represents 16% to 23% organic EBITDA growth after adjusting for the additional 5-month contribution from the DOTW business.
The post Why the Webjet share price rocketed 10% higher today appeared first on Motley Fool Australia.
Does this make Webjet a share to buy? Find out here.
Our Motley Fool experts have just released a brand new FREE report, detailing 5 dirt cheap shares that you can buy today.
One stock is an Australian internet darling with a rock solid reputation and an exciting new business line that promises years (or even decades) of growth… while trading at an ultra-low price…
Another is a diversified conglomerate trading near a 52-week low all while offering a 2.8% fully franked yield...
Plus 3 more cheap bets that could position you to profit over the next 12 months!
See for yourself now. Simply click the link below to scoop up your FREE copy and discover all 5 shares. But you will want to hurry – this free report is available for a brief time only.
- Man bets $221,666 on one ASX stock
- Top analysts name their top 3 ASX blue chip shares for 2019
- 3 quality dividend shares to boost your income
- NEW: Free report names top 3 ASX dividend shares to buy for 2019
- 5 Stocks for Potentially Building Wealth After 50
Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Webjet Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2019