Nov 26, 2015 at 05:00 Thomas Cook: volatile but highly attractive Travel agent Thomas Cook (TCG) has been upgraded after ‘surprisingly robust current trading’.
Shore Capital analyst Greg Johnson upgraded his recommendation from ‘hold’ to ‘buy’ but does not have a target price on the stock. The shares jumped 10.8% to 109p yesterday.
‘Thomas Cook has issued results where underlying profit before tax was some £20 million ahead of our forecasts at £171 million,’ he said. ‘The outperformance reflected £10 million higher operating profit at £311 million and interest £10 million lower than our forecast at £141 million.’
He added that the new operating model is expected to deliver between £100 million and £129 million of earnings improvement between 2016 and 2018.
‘Current trading appears surprisingly robust, given the geopolitical backdrop for both winter and summer in the UK and Northern Europe, although trading continues to be soft in continental Europe,’ said Johnson.
‘Thomas Cook trades on a 2016 price/earnings ratio of 10x. We are upgrading our recommendation on the stock… noting the potential to deliver greater cashflow and margin improvement over the longer term. Although trading is likely to be volatile we see the current valuation as highly attractive.’
After all we've been trough I found it quite a relief to see TCG-shares up today. Yes, we have not nearly recoverd from recent losses, but in spite of all the terror we have settled way above the ominous pound Sterling. What more could we ask for in one day? Dr. Fankhauser and his team will never match the eloquence of TUIs spokesmen, nor will they ever have the press in their favour (unless they are paying way too much for it). Considering this as well as all the other headwinds they were facing in 2015 we see a respectable balance sheet. The highlight for me today was the limitations they put to the dividend in view of focussing on debt repaiment. Sounds like a decent balance to me. Wishing all of us a more peaceful world (whether you hold travel shares or not) and, of course, GLA to all TCG holders!
Just relieved it`s got back to pre Nov 13th horrors,"ins&outs" having a field day.Could not bring myself to get involved further,(got enough),troubles in the world still causing caution in this section.Good luck to new investors here,but don`t get caught in a pull back.especially if Putin shows his muscles.
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