It’s a bumpy morning for budget airline Wizz Air Holdings (LSE: WIZZ), down 6.26% in early trading after it cut growth targets and complained about a cancellation-plagued first quarter due to – you guessed it – European air traffic control disputes.
It’s the Wizz!
Wizz posted profits of €50m in the three months to 30 June but this was €8.1m lower than a year ago, which reflected higher than expected disruption costs and the busy Easter period falling outside the quarter this year.
Total unit revenue dropped 1.4% to 3.67 euro cents per available seat kilometre (ASK), while total unit costs fell 2.2% to 3.3 euro cents per ASK. Wizz also suffered an “unprecedented number of disruptions” due to you-know-what, which increased the number of cancellations from 34 to 145 and cost it €9.1m in passenger delay and compensation costs, up 203%.
On the plus side, total revenue increased 17.9% to €553.4m, while ticket revenues increased 24.5% to €330.4m. Ancillary revenues grew 9.3% to €223m. CEO József Váradi hailed the group’s “double-digit growth in passenger numbers and revenues” and “ever higher load factors”. However, he warned that air traffic control disruptions are likely to continue into the autumn, and combined with fuel prices rising, the group is trimming its full-year growth target from 20% to 18%.
Investors should not feel too aggrieved, the stock is up more than 40% over the last year, and 112% over three years. Any dip could be an entry point, if you are fast, as it is already climbing again. Wizz trades at a forecast valuation of 16.4 times earnings although this year could be bumpy, with City analysts predicting a 37% drop in earnings, but this should rebound 21% in the year to 31 March 2020.
The £3.47bn budget carrier boasts free cash of €1,116.6m and my Foolish colleague Paul Summers notes that its capital and operating margins are markedly higher than its rivals. Wizz is still a flyer.
Better news for investors in premium lifestyle fashion chain Joules Group (LSE: JOUL), which is up a slinky 2.31% after posting an 18.4% rise in group revenue to £185.9m and an even sharper 28.5% increase in underlying profit before tax to £13m.
Today’s annual results to 27 May also showed underlying basic earnings per share (EPS) jumped 28.5% to 11.8p, with statutory basic EPS up by 36% to 9.9p. Gross margins increased 25 basis points to 55.7%.
Joules continues to win converts to its branded lifestyle clothing, accessories and homewares, with active customers up 23.4% to 1.15m. It is successfully promoting its ‘authentic’ British wares in the US, Germany, France and other European markets, with international revenue up 35.7% to 13.1% of group revenue.
Pint of Porter
CEO Colin Porter hailed another strong year of growth due to to the strength and appeal of the Joules brand, and its loyal customer base. He said momentum will continue into full-year 2019, and proposed a final dividend of 1.3p per share. The forecast dividend is 0.9%, covered 4.4 times.
Joules has risen 102% in two years and could still double your money, even if it is valued 26.8 times earnings, as its robust double-digit earnings growth forecasts make this a stylish portfolio accessory.
harveyj has no position in any of the shares mentioned. The Motley Fool UK has recommended Joules Group. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.