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Dart issues profit warning

RESULTS: Travel firm Dart (DTG) said operating profits for the current financial year would disappoint investors, prompting a 24 per cent plunge in its stock.
June 27, 2014

Dart (DTG) is the latest travel company to issue a profit warning. The shares lost nearly a quarter of their value on the day of the news, even though it was accompanied by a strong set of results for the year to 31 March, when operating profits soared 30 per cent to £49m.

IC TIP: Hold at 189p

In fact, Dart's last financial year was a resounding success. The package holiday business, Jet2holidays, doubled customer numbers for the third year in a row to 830,019, driving a parallel leap in turnover from £245m to £496m. The airline business also did well, growing sales by 16 per cent to £643m as demand for seats rose.

But last year’s achievements were overshadowed by revelations about current trading. Management said capacity outstripped demand for summer bookings, which would send operating profits for the current financial year lower than analysts' forecasts. "It’s just a blip," says chief financial officer Gary Brown, “and we’re making the necessary adjustments to make sure this is short-term."

Brokerage Arden Partners downgraded forecasts for the current financial year by more than 30 per cent. Pre-tax profits are now expected to be in the region of £30m (down from £49.2m last year), giving EPS of 16.3p (from 26.4p).

DART GROUP (DTG)

ORD PRICE:189pMARKET VALUE:£276m
TOUCH:188-190p12-MONTH HIGH:305pLOW: 178p
DIVIDEND YIELD:1.4%PE RATIO:8
NET ASSET VALUE:125pNET CASH:£201m

Year to 31 MarchTurnover (£bn)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
20100.4422.211.11.11
20110.5426.212.21.23
20120.6828.116.01.32
20130.8740.521.71.87
20141.1242.124.72.74
% change+29+4+14+47

Ex-div: 10 Sep

Payment: 17 Oct