LONDON -- The shares of Thomas Cook (LSE: TCG ) have surged 15.1% to 100 pence during London today to extend their 12-month gain to 326%.
Today's advance was prompted by a statement that outlined fresh cost-savings and various operational targets for 2015. The travel agent revealed plans to reduce annual costs by a further 50 million pounds to 350 million pounds within three years. The company also said it wanted sales of 500 million pounds from new products and U.K. operating margins in excess of 5% by 2015.
Thomas Cook also described current trading as "robust," said summer trading was "progressing well," and claimed the outlook for the full year was "encouraging." Harriet Green, Thomas Cook's chief executive, said: "Our Business Transformation plans are ahead of schedule and already delivering substantially improved performance, which resulted in our recent return to the FTSE 250. … We are excited to now reveal our new strategy based on four cornerstone principles; delighting customers with trusted, personalised holiday experiences through a high-tech, high-touch approach."
This time last year, Thomas Cook's shares were languishing at 23.5 pence after a series of profit warnings during 2011 wiped more than 90% from the group's market value.
Today's market cap is 910 million pounds, which, when added to the firm's average net debt level gives an enterprise value of nearly 2 billion pounds. Assuming the new 5% margin target for the U.K. can be achieved for the entire group, earnings might one day recover to 300 million pounds, should last year's sales of 9 billion pounds be maintained. That forecast could value the business at less than seven times potential profits.
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