Oil Prices Fall And These Travel Stocks Deserve A Closer Look

Oil prices have just dropped nearly 5%, with Brent crude below $80 per barrel and US WTI at $76, after progress toward reopening the Strait of Hormuz. For airlines and travel stocks, fuel is a key input cost, so any shift in crude can quickly change the risk and reward profile. At the same time, negotiations remain uncertain, which keeps volatility in play. This article looks at how this news links to the Airlines and Travel Stocks screener and highlights 3 stocks that appear positively exposed to this move in oil and the potential reopening of a major global shipping route.

Corporate Travel Management (ASX:CTD)

Overview: Corporate Travel Management is a Brisbane based company that organises and manages corporate, leisure and specialist travel, including meetings, events, sports and resources travel, across Australia and New Zealand, North America, Asia and Europe.

Operations: The company generates travel services revenue of about A$60.9m in Asia, A$126.2m in Europe, A$319.9m in North America and A$181.4m in Australia and New Zealand.

Market Cap: A$2.23b

Corporate Travel Management provides exposure to corporate travel demand at a time when cheaper fuel can support lower airfares and potentially stronger travel volumes. Forecast earnings growth of around 18.6% per year, faster than the Australian market, and high quality earnings are noted as positives. However, current profit margins of 9.2% and a modest 5.3% ROE raise questions about how efficiently that growth converts into returns. The stock also trades on a relatively high P/E and sits above one estimate of fair value. In addition, a highly illiquid share register and higher reliance on external borrowing add extra risk that investors may wish to weigh carefully.

Corporate Travel Management’s growth story looks strong on paper, but the real question is how that forecast compounding, current margins and debt profile fit together in practice. Get the fuller picture in the analysis report for Corporate Travel Management

Pursuit Attractions and Hospitality (PRSU)

Overview: Pursuit Attractions and Hospitality is a Denver based attraction and hospitality company that owns lodges, eco luxury resorts and travel experiences in iconic destinations across the United States, Canada, Iceland and Costa Rica, often combining lodging, dining, retail and transportation in one integrated offering.

Operations: Pursuit Attractions and Hospitality generates about US$466.5m in revenue from its Pursuit segment, with key contributions from Canada, the United States and Iceland.

Market Cap: US$1.40b

Pursuit Attractions and Hospitality provides direct exposure to premium experiential travel at a time when lower oil prices can ease airline costs and support long haul visitation to its bucket list destinations. Earnings growth forecasts are strong, and management is focusing on higher per guest spending, while also recycling capital from the Flyover divestiture into new projects, acquisitions and buybacks. At the same time, a high P/E, reliance on a concentrated set of outdoor destinations, and exposure to climate and regulatory risks mean execution needs to remain disciplined. A key question for investors is whether Pursuit’s pricing power, eco focused investments and expansion pipeline justify paying a premium for this growth story in the current travel cycle.

Pursuit Attractions and Hospitality’s premium travel story, with high per guest spending and fresh capital from the Flyover sale, could be stronger than many investors assume. See how the analyst forecasts for Pursuit Attractions and Hospitality lines up with its climate and destination risks.

Web Travel Group (ASX:WEB)

Overview: Web Travel Group is an online travel company that runs WebBeds, a wholesale marketplace where hotels and other travel suppliers load their room and package inventory, which is then aggregated and sold on to travel agents and other buyers who serve end travellers across Australia, the UAE, the UK, Spain and other markets.

Operations: Web Travel Group generates about A$394.1m in revenue from its Business to Business Travel segment, with key geographic exposure to the United Arab Emirates at A$190.9m, Spain at A$40.9m and other regions at A$123.3m.

Market Cap: A$1.27b

Web Travel Group sits at the heart of global hotel distribution. Lower oil prices and easing geopolitical risk have the potential to support flight capacity and travel demand that flows directly into booking volumes on its WebBeds platform. Forecast earnings growth of 24.76% per year, improving margins and a strong TTV focus are balanced by a high P/E, a recent class action over TTV disclosures and 100% of liabilities funded by higher risk external borrowings. If the planned demerger, technology investment and buyback deliver the efficiency and scale management is aiming for, the current gap to some analyst targets and DCF estimates could be more interesting than the headline valuation suggests.

Web Travel Group’s growth story, class action overhang and debt funded balance sheet could be masking the real opportunity. Weigh that mix of acceleration and risk in the analysis report for Web Travel Group

The three stocks in this article are just a starting point, and the full Airlines and Travel Stocks screener surfaces 13 more airlines and travel companies with equally compelling narratives tied to fuel costs, route reopenings and balance sheet strength. Use Simply Wall St to identify and analyze the specific catalysts and narratives that matter to you so you can focus on the opportunities across the sector that best align with your own views and requirements.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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