"Flight Centre Travel Group Limited (ASX:FLT) Shares Could Be 35% Below Their Intrinsic Value Estimate"

In the ever-evolving world of travel and tourism, Flight Centre Travel Group Limited (ASX:FLT) has emerged as a beacon of resilience and growth. The company's recent financial performance has been nothing short of spectacular, with a 265% year-over-year increase in EBITDA and a record total transaction value (TTV) of AU$110 billion. But the question on every investor's mind is: are FLT shares undervalued, and if so, by how much?

To answer this, let's dive into the numbers. In the 2023 fiscal year, FLT achieved an EBITDA of AU$3.016 billion, a significant turnaround from the AU$1.831 billion loss in the previous year. This performance not only exceeded the company's revised target range but also indicates a robust financial health. The company's profit before tax (PBT) also saw a remarkable turnaround, with a PBT of AU$1.06 billion compared to a loss of AU$3.61 billion in the previous year.

The company's total transaction value (TTV) reached a record AU$110 billion in the 2023 fiscal year, a 96% increase from the previous year's AU$56 billion. This growth in TTV is driven by strong performance across all regions, with Europe, the Middle East, and Africa (EMEA) showing a 59% increase, Asia a 24% increase, the Americas a 15.6% increase, and Australia and New Zealand (ANZ) a 10.5% increase. The Americas business, in particular, is the largest contributor to the company's enterprise total transaction value, accounting for 31% of the total.



But the story doesn't end there. The company's share price has seen a double-digit increase of over 10% in the past couple of months on the ASX. This share price increase is a direct result of the company's strong financial performance and positive outlook, which has been factored into the current share price. The company's future growth prospects are also promising, with profit expected to more than double over the next couple of years. This growth is expected to feed into a higher share valuation, making Flight Centre Travel Group an attractive investment opportunity for those looking for growth in their portfolio.

However, it's not all sunshine and rainbows. The travel industry is highly sensitive to economic conditions and market volatility. For instance, the company's performance in the 2022 fiscal year was significantly impacted by the pandemic, resulting in a basic loss of AU$3.61 billion and a lawful loss of AU$3.78 billion. To address this, Flight Centre Travel Group has been focusing on diversifying its revenue streams and expanding its market share. For example, the company's corporate business delivered a 44% underlying PBT increase to AU$211 million, with Corporate Traveler contributing a record profit. This diversification helps mitigate the risks associated with economic downturns.

In conclusion, Flight Centre Travel Group Limited (ASX:FLT) shares could be 35% below their intrinsic value estimate based on the company's strong financial performance, record transaction values, and promising future growth prospects. However, investors should also consider the potential risks and challenges that could impact the company's ability to achieve its projected growth and maintain its current valuation.