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Headlines cloud Thomas Cook

A slew of negative headlines have masked an improving picture at holiday firm Thomas Cook (TCG).
May 20, 2015

As far as public relations go, Thomas Cook (TCG) has had a rough passage lately. Back in November chief executive Harriet Green unleashed much speculation by resigning with immediate effect without a clear explanation, while the media have more recently focused on the holiday firm's handling of the death of two children at a hotel in Corfu nine years ago. All this has masked what might be an improving picture for the travel firm's shareholders. The board even intends to resume dividend payments next year.

IC TIP: Hold at 156p

Despite a typically weaker first half, new chief executive Peter Fankhauser said two years of self-help measures - including product improvements and customer services initiatives - along with stable gross margins had yielded a 23 per cent improvement in operating losses to £220m. The UK business did particularly well, reporting a one percentage-point increase in margins, as did Airlines Germany, which also boosted its margins.

The summer 2015 season is 62 per cent sold, with bookings running 2 per cent ahead of last year. Perhaps surprisingly, however, management warn that the booking performance in the third quarter has been below par, with soft demand and more customers booking later than expected in the cycle.

Analysts at Numis expect pre-tax profits of £210m for the current financial year, giving EPS of 11p. This compares with £182m and 11.1p last year.

THOMAS COOK (TCG)
ORD PRICE:156pMARKET VALUE:£2.4bn
TOUCH:155-156p12-MONTH HIGH:167pLOW: 99p
DIVIDEND YIELD:nilPE RATIO:na
NET ASSET VALUE:*NET DEBT:£700m

Half-year to 31 MarTurnover (£bn)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
20143.01-366-25.3nil
20152.74-303-20.8nil
% change-9---

Ex-div: na

Payment: na

*Negative shareholder funds