Webjet Share Price Soars Higher on Growing Profits

Webjet Ltd [ASX:WEB] jumped as much as 5.3% this morning to $11.92 per share.

Why did the Webjet Share Price rise 5.3%?

This morning Webjet released their full year results for FY17 and what a release it was. The $1.3 billion company grew total revenues by an amazing 53.3% to $238.2 million. Profits more than doubled to $52.4 million.

In light of such strong profits, non-executive chairman, Roger Sharp told shareholders:

We have chosen to increase our final dividend by 25% to 10 cents due to the strong improvement in core earnings in FY17.

The group also generated $29.6 million in free cash flow.

What’s next for Webjet?

There’s no denying that Webjet is a growing company. But how long will their growth last? We want to know that Webjet has an edge. If they do then they’ll be able to acquire more customers while retaining existing clients — a great sign for growth.

The company generates a 24% return on equity and a 19.7% return on invested capital. And they’ve generated similar returns since 2012. The business must be doing something right, but what?

It might not be obvious how Webjet could create an edge in their industry. After all, the business just sells flights and accommodation like the rest of their competitors.

But one reason why they could try to build an edge is to create a diversified, more attractive list of offerings compared to their competitors. And that’s exactly what they’re trying to do in the business-to-business space.

Webjet not only sells flights and accommodation to you and me, they also sell accommodation to other travel providers. They’ve grown their B2B operations through acquisitions and are already seeing strong signs of growth.

I suggest you do some more digging on Webjet, they could become the darling stock that many investors missed.

Regards,

Härje Ronngard,

Junior Analyst, Money Morning

PS: Want to see more growth companies like Webjet? Take a look at the top three small-caps trading on the ASX right now.


Money Morning is Australia’s most outspoken financial news service. Your Money Morning editorial team are not afraid to tell it like it is. From calling out politicians to taking on the housing industry, our aim is to cut through the hype and BS to help you make sense of the stories that make a difference to your wealth. Whether you agree with us or not, you’ll find our common-sense, thought provoking arguments well worth a read. Money Morning Australia is published by Port Phillip Publishing, an independent financial publisher based in Melbourne, Australia. As an Australian financial services license holder we are subject to the regulations and laws of Corporations Act and Financial Services Act.


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