In recent weeks, a number of mid-to-large-cap companies, including BXB, CSL, EDV, WOW, and COH, have announced downgrades in their earnings forecasts. Typically, the aftermath of these announcements witnesses a substantial one-day selloff, followed by a gradual decline over the subsequent days. Occasionally, a minor recovery may occur, but this is often followed by a prolonged period of stagnant trading.
This week saw Webjet release a disappointing financial report for FY26. Key metrics such as revenue and total transaction volumes remained largely stead year-on-year; however, the underlying net profit after tax (NPAT) saw a significant decline of 24%, landing at $13.6 million—22% below market expectations.
Webjet outlined several critical factors affecting its performance:
1. Virgin has begun to retract its commercial partnerships.
2. New regulatory changes regarding RBA surcharging are likely to impact total transaction volumes (TTVs).
3. Variable revenue streams, typically ranging from $1 million to $10 million annually, are anticipated to decrease.
Despite Webjet’s shares hitting record lows, the situation may hold potential for investors:
– The stock is currently trading at 45 cents, equating to a market capitalisation of $170 million, representing a nearly 48% decline year-to-date.
– Just six months ago, BGH and Helloworld were prepared to offer between 90 and 91 cents cash per share.
– Webjet boasts a solid cash position of $93.9 million as of 31 March 2026, alongside no debt and net assets totalling $138.4 million.
– The stock trades at approximately 3.5 times trailing EBITDA, not accounting for the recently acquired Locomote business and the anticipated turnaround of the Car & Motorhomes segment.
This scenario presents a potential value opportunity; however, it is plausible that the stock price may decline further due to worsening fundamental conditions.
