TUI Travel Predicts Profit Growth to Approach 10%

LONDON -- The shares of TUI Travel (LSE: TT  ) has 3.7% as of 8:40 a.m. EDT after the travel agent said current-year profit growth could approach 10%.

TUI, whose brands include Thomson and First Choice, confirmed that profit could advance toward the top end of its earlier expectations during the 12 months to September 2013. The optimistic prediction from the FTSE 100 member accompanied a first-half update revealing that mainstream winter sales were up 2% alongside improved margins. TUI said the "very strong trading momentum" had continued with summer bookings, with mainstream summer holiday sales up 7%.

Peter Long, chief executive of TUI, said:

We have a clear roadmap for growth built upon a deep understanding of our industry and customers. Our strong operational performance over winter means we will deliver reduced winter losses. ... This very strong trading has continued into Summer 2013, leaving us well placed to achieve a full-year performance toward the upper end of our growth targets.

Assuming TUI's profit grows at 10% and the advance is reflected at the underlying post-tax level, near-term earnings could be 28 pence per share. That projection would place TUI's shares on a P/E of less than 12. Meanwhile, TUI's trailing 11.7 pence per-share dividend currently supports a 3.6% income.

Of course, whether this morning's statement, the share-price valuation, and the general prospects for the holiday sector all combine to make TUI a buy right now is something only you can decide. But if you already own TUI shares and are looking for an alternative FTSE 100 opportunity, this exclusive in-depth report reviews a particularly attractive possibility. Indeed, this alternative offers a 5.7% income, might be worth 850 pence versus a current price of 700 pence, and has been declared the "Motley Fool's Top Income Stock For 2013"! Just click here for the report -- it's free.

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12/31/1969 7:00 PM
TT $0.00 Down +0.00 +0.00%
TUI Travel CAPS Rating: No stars