FLT share price in focus
Founded in Sydney in 1982, Flight Centre is a travel agency that operates under multiple names across over 80 countries.
It’s involved in both the retail and corporate sectors and also offers additional services such as tour operations, travel experiences and hotel management.
Flight Centre aims to offer a personal touch that many online travel agencies might not have. Consultants are able to handle all the work involved and are often able to find exclusive deals for their customers, which keeps them coming back.
Flight Centre Travel Group Ltd is a growth stock, and so it requires a different set of rules and may not be straightforward to value at times. Studies have shown that over 5-10+ years, it’s top-line revenue growth which explains a stock’s performance. That’s why it’s good to see Flight Centre Travel Group Ltd is able to grow revenue at 89.8%, a strong clip.
REA shares
Founded in 1995, REA Group is a Melbourne-based real estate advertising company that is majority-owned by News Corp. In Australia, it’s best known for its Realestate.com.au platform.
REA Group operates on a global scale and now operates property websites in around 10 countries used by some 20,000 agents. In a typical month, the core Australian website gets over 55 million visits. While the business has diversified globally, Australian operations still account for the lion’s share of revenue. Within Australia, REA makes money by listing properties for sale or rent (i.e. the agent uses REA’s website to show properties, which the property owner is on the hook to pay). It also makes money from financial services (e.g. mortgage broking), but this is a much smaller part of the business.
The competitive advantge that REA has is the same as any other established platform: network effects and economies of scale. In other words, Domain (the #2 player) is meaningfully behind REA in users and views, which means REA can continue to control pricing and market dynamics. REA also benefits from owning assets across all parts of real estate, including listing, advertising, mortgage broking, and house sharing.
FLT share price valuation
As a growth company, some of the trends we would be looking for from FLT include revenue growth, profit growth, and return on equity (ROE). Since 2021, FLT has grown revenue at a rate of 89.8% per year to reach $2,708m in FY24. Over the same time period, net profit has fallen from $433m to $140m. FLT last reported a ROE of 11.9%.
Over the last 3 years, REA has increased revenue at a rate of 18.6% per year to hit $1,677m in FY24. Meanwhile, net profit has tumbled from $323m to $303m. REA’s last reported ROE was 18.9%.
Please keep in mind that context is important – these metrics give us some indication of company performance, but we need a lot more info to work out the value of FLT or REA shares. To learn more about valuation, I’d recommend signing up for one of our free online investing courses.
