Flight Centre Travel

About the author:

Belinda Moore
Author name:
By Belinda Moore
Job title:
Senior Analyst
Date posted:
31 January 2014, 8:29 AM
Sectors Covered:
Agriculture, Food & Beverage, Travel

With expectations of a strong 1H14 result and possible earnings upgrade, we believe the Flight Centre Travel (FLT) share price will outperform this reporting season. The market rewards stock that report solid earnings growth, and we believe FLT is well positioned to report double digit earnings growth over the next few years.

What we expect

FLT reports its 1H14 on 26 February. We forecast an underlying NPAT of A$102.0m, up 11% on the pcp. We forecast an interim dividend of 52cps, fully franked, up from 46cps the pcp.

The result should be led by Leisure, but Corporate is also performing reasonably well. 

AUD fluctuations have not impacted Australian outbound travel demand, which remains strong, and FLT continues to win market share.

Earnings guidance

FLT's FY14 NPAT guidance is A$370-385m, up 8-12%. Our forecast of A$388.1m or 13.1% growth (just above FLT's guidance) remains unchanged for now, however we highlight there is upside risk.

FLT's initial earnings guidance for the new financial year generally comes with some conservatism (there were two upgrades in FY13). Management has in place strategies to grow future profit and productivity in all businesses globally. We believe that FLT can continue to report solid earnings growth over the next few years as geographies outside Australia make a more meaningful contribution.

Upgrade to Add

In the current economic environment, few ASX100 companies are reporting the quantum of earnings growth we expect from FLT. The diversity and strength of its business model allows it to deliver strong profit growth year in, year out. We believe that growth will be rewarded and that the company deserves to trade on premium multiples. 

After share price weakness (off 16% from November 2013 high of A$53.13) and given out strong conviction in FLT's outlook, we upgrade to an Add recommendation with a share price target of A$50.80.

More information

If you are interested in finding out more about Flight Centre Travel (FLT), please contact your nearest Morgans office.

Disclaimer: The information contained in this report is provided to you by Morgans Financial Limited as general advice only, and is made without consideration of an individual's relevant personal circumstances. Morgans Financial Limited ABN 49 010 669 726, its related bodies corporate, directors and officers, employees, authorised representatives and agents (“Morgans”) do not accept any liability for any loss or damage arising from or in connection with any action taken or not taken on the basis of information contained in this report, or for any errors or omissions contained within. It is recommended that any persons who wish to act upon this report consult with their Morgans investment adviser before doing so.

  • Print this page
  • Copy Link