The Helloworld Travel Ltd (ASX: HLO) share price could be a mover this morning after providing profit guidance for FY20.
Helloworld, created in 2013, is an Australian and New Zealand travel distribution company with 2,200 staff spread across Australia, New Zealand, Fiji, the USA, Asia, India and Europe. It operates retail travel networks, corporate travel management services, destination management services, air ticket consolidation, wholesale travel services and online operations.
Helloworld’s FY20 Profit Guidance
Helloworld announced that it has finalised its major FY20 commercial agreements, including new global distribution systems (GDS) contracts.
Due to this, it was able to provide EBITDA (click here to learn what EBITDA means) guidance. Subject to no material changes in trading conditions, EBITDA is expected to be in the range of $83 million to $87 million for FY20.
In FY19 the travel company generated EBITDA of $77.3 million, so this means that Helloworld is expecting EBITDA growth of 7.4% to 12.5%.
If the (diluted profit/)earnings per share were to rise by 7.4% then at today’s pre-open price it’s priced at around 13 times the FY20 estimated earnings. This seems like a pretty good price for a business growing at a good rate.
Helloworld CEO and Managing Director Andrew Burnes said: “We are confident that given a continuation of current trading conditions we will again have a strong year in FY20.
Our acquisitions are performing well, our retail networks are either holding their own or growing, or supplier relations are very good, our corporate business is doing very well and across the Tasman our New Zealand teams are going from strength to strength. We are in a very strong position to continue the businesses momentum and achieve our targets in the year ahead.”
I can see why investors have sent the share price of Helloworld up 6.7% in reaction to this, but I’d rather buy the shares of the growth businesses in the free report below due to the even better growth prospects.
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