Thomas Cook - Thursday’s Q1 update
After 3 utterly dreadful years, 2017 saw a pretty strong comeback from Thomas Cook. Granted, most of its rise came in a concentrated period over July and August, with its performance since then slightly more mixed. Still, it did manage to hit a 2 and a half year high of £1.32 in early January, and though it might have slipped to a current trading price of £1.22, that’s a huge improvement on sub-90p levels it found itself at this point last year.
Thomas Cook’s most recent update came towards the end of November, and sparked a quite aggressively negative reaction from investors. Overall its full year results were healthy: group like-for-like revenue was up 9%, while pre-tax profits jumped 12% to £46 million. However, a 1.3% decline in its gross margin was a cause for concern for investors, the brunt of the drop coming from its UK arm and the impact of Hurricane Irma.
Despite a decent 3% rise in revenue the UK division’s underlying profits plunged 40% to £52 million for the year to 30th September. There was a lot going on to cause such a nose-dive, including rising hotel prices, costly fraudulent illness claims, the weaker pound and a turn away from eastern Mediterranean holidays due to political unrest in favour of the ultra-competitive Spanish market.
In terms of Thursday’s first quarter statement, investors will be eager to see that some of those UK pressures have eased, something that may well be the case if an increase in demand for destinations like Turkey, Egypt, Greece and Cyprus draw holidaymakers from the Spanish holiday price war Thomas Cook found themselves engaged in during the second half of its last financial year.
Thomas Cook Group Plc (LON:TCG) has a consensus rating of £1.18 alongside an average target price of ‘Hold’.
Disclaimer: Spreadex provides an execution only service and the comments above do not constitute (or should not be construed as constituting) investment advice or recommendations, or a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any person placing trades based on their interpretations of the above comments does so entirely at their own risk. Spreadex Ltd is a financial and sports spread betting and sports fixed odds betting firm, which specialises in the personal service and credit area. Founded in 1999, Spreadex is recognised as one of the longest established spread betting firms in the industry with a strong reputation for its high level of customer service and account management.
In relation to spread betting, Spreadex Ltd is authorised and regulated by the Financial Conduct Authority. Spread betting carries a high level of risk to your capital and can result in losses larger than your initial stake/deposit. It may not be suitable for everyone, so please ensure you fully understand the risks involved. In relation to fixed odds, Spreadex Ltd is licensed and regulated by the Gambling Commission under licence number.