Thomas Cook To Bask In The Sunshine Following Results?
Spreadex | May 14, 2018 11:04
Will Thomas Cook be sunning itself in the glow of investor-adulation following Thursday’s interim results?
Up until very recently 2018 hadn’t been going to well for the holiday operator. While not disastrous, Thomas Cook has spent the last few months drifting lower, from January’s £1.30 highs to March and April’s £1.16 lows.
However, since the end of April things have begun to improve. A string of ratings upgrades from the likes of Jefferies and Credit Suisse (SIX:CSGN), who have the company at ‘Buy’ and ‘Outperform’ respectively, have sent the stock sharply higher. Thomas Cook Group PLC now sits at a current trading price, and 34 month peak, of £1.40.
Last time the firm addressed the markets, investors weren’t too happy with the overall vibe the company laid out. Despite stating that ‘trading for 2018 so far is encouraging’, the main takeaway back in February came from CEO Peter Fankhauser, who lamented a ‘highly competitive – and, at times, unpredictable – market’.
Q1 revenues rose 7% to £1.75 billion, with gross profits up 4.4% to £376 million and bookings rising 8%. However the gross margin slipped 50 basis points to 21.5% due to ‘higher Spanish hotel bed cost inflation’ and ‘a lower mix of long haul sales’ across the quarter. To combat the former issue, Thomas Cook is aiming to re-balance its programme towards ‘higher margin destinations’ like Turkey and Egypt.
In terms of Thursday’s half year update, investors will be hoping that the gross margin didn’t take another dip in the second quarter. They’ll also want to see the continuation of German airline Condor’s recovery, a repeat of that solid Q1 revenue growth in Q2, and a further pivot towards Turkey and Egypt in the company’s summer bookings.
Thomas Cook Group (LON:TCG) has a consensus rating of ‘Hold’ alongside an average target price of £1.24.
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.
Get The App
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.
Original post
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.