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Can Thomas Cook Avoid Post-Holiday Blues?

Published 16/11/2017, 11:26
Updated 21/10/2020, 09:15

After a truly horrible couple of years, Thomas Cook seems to have got back on track in 2017. It admittedly spent the first half of the year trading fairly laterally, moving between 85p and 95p; however, it rocketed higher over summer, culminating in a 26 month peak of £1.28 in early September. Since then its performance has been a bit more mixed, though it has held onto a decent chunk of its summer growth. Thomas Cook Group PLC now sits at a current trading price of £1.13.

Thomas Cook Group PLC

As mentioned the company’s sharp rise began in July, in large part thanks to its third quarter results. Summer bookings were up 11%, with Greece, Cyprus and Bulgaria all seeing substantial volume growth. There was even good news from Turkey and Tunisia; the former saw holidaymakers begin to return to the destination after last year’s military coup had caused demand to drop, while Thomas Cook said they would restart offerings to the latter for the first time since 2015’s terrorist attack. All this helped revenue rocket 14% higher to £2.27 billion, with pre-tax losses more than halving year-on-year to £31 million.

The firm’s most recent update came towards the end of September, and wasn’t quite as rapturously received as the Q3 statement in July. Still, winter 2017/18 booked revenue rose 6%, with a further pick-up in interest in Turkey and North Africa, while it confirmed that full year profit would be in line with expectations.

Alongside this fairly bog-standard September statement came a couple of interesting developments. First was a deal with Expedia (NASDAQ:EXPE), which sees Thomas Cook able to offer its customers access to 60,000 additional hotels, while also ‘significantly’ reducing the cost of running its city breaks and hotel-only business. The other move saw Thomas Cook both buy a 42% stake in German hotel and tour business Aldiana from LMEY, and announce it was creating a joint hotel investment platform with the Swiss group.

In terms of Wednesday’s full year results, alongside decent profit numbers investors will want to see evidence that there has been continued increase in demand for Turkey and North Africa, i.e. the regions that most impacted Thomas Cook’s performance in the last few years.

Thomas Cook Group Plc (LON:TCG) has a consensus rating of ‘Hold’ alongside an average target price of 98.99p.

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