What Happened to the Flight Centre Share Price?
Flight Centre Travel Group Limited [ASX:FLT] closed up 1.07% today, after initially beginning the day 2.03% down. Flight Centre is a travel agency business. The company provides travel services for most countries in the world. Flight Centre has more than 30 brands under four categories — leisure, corporate, wholesale and other. However, the flagship brand is Flight Centre.
Why Did This Happen to the Flight Centre Share Price?
The company provided its outlook for the 2013-14 financial year. The guidance came in at $370–$380 million for underlying profit before tax (PBT) to June 30 2014. This result is at the low to mid-point of the initial projection. In a statement, Flight Centre managing director Graham Turner said ‘Our ability to hit the top of our targeted range has, however, been adversely affected by disappointing leisure travel results in Canada and a tougher trading environment for the large Australian leisure business during the past eight weeks.’
Turner also noted that FLT is increasing their Australian market share, but the high levels of growth seen in last year’s fourth quarter financial report won’t be repeated again this period. Turner also suggested the growth slowdown was most evident in May as consumer confidence declined.
What Now For the Flight Centre Travel Group?
While Flight Centre has lowered its expectation, the company continues to be profitable. Also, Turner points out that cheap airfares continue, which is bound to stimulate demand for leisure travel.
However, be aware that FLT is sensitive to negative movement in consumer confidence. The stock is currently trading at $46.30. Based on the PBT downgrade, I would expect the stock to move either side of $46 for the short term. Around $45.00 is the nearest support price for Flight Centre. A lift in consumer sentiment and solid financial data for 2014 should see this stock trade past $47.50.
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FLT has steadily increased its dividend over the past ten years from 61 cents per share to $1.37 for 2013. The company has minimal debt.
Full year financial data will be available in August this year.
Shae Smith+
Editor, Money Morning
