Good morning! Final reminder for my Brighton ShareSoc investor evening tonight from 6pm. We could do with a few more people to attend, so if you would like to come along then please get in touch.
Dart (LON:DTG)
Shocker of the day is the profit warning from this airline & package holiday firm, operating the Jet2 brand. Their shares have plunged 26% to 187p this morning, which comes on top of previous falls from a 300p peak in April 2014.
Results for the year ended 31 Mar 2014 published this morning look good - turnover is a substantial £1.12bn, operating profit of £49.2m is up 30% against prior year, and EPS rose 14% to 24.7p. At the current share price of 187p that puts the company on a PER of just 7.6 times. That looks a bargain to me.
One fly in the ointment is the outlook statement, which is negative (although frustratingly it doesn't quantify how negative, which creates uncertainty);
In relation to the current financial year, we are finding demand for leisure travel, this summer, to the markets we serve, less buoyant than we would have hoped for and market pricing weak. This may be due to the weather, the World Cup, or because the financial recovery hasn't yet taken hold in our home territory, the North of the UK.
Unfortunately, therefore, in view of the current visibility we have of our remaining summer 2014 forward bookings, we now expect the current year operating profit outturn to be lower than previous market expectations.
That doesn't sound too bad to me. They don't say substantially below, just below. So given that broker consensus for the year ended 31 Mar 2015 seems to be around 24p at the moment, then we might perhaps be looking at around 20p EPS for this year instead. I'd be surprised if it was any lower than that.
The reasons given for the profit shortfall sound like lack of demand, and competitive pressures, which are things that should be sorted as economic recovery develops over time. Therefore in my view this could be a good buying opportunity to get into a fundamentally sound business, which is having a blip in trading, at an attractive price.
The other potential problem is a landmark legal ruling, from a customer called Ronald Huzar, who has sued Jet2.com for compensation after his…
