In recent weeks, several mid-to-large cap companies have downgraded their earnings forecasts, including notable names like BXB, CSL, EDV, WOW, and COH. The subsequent market reaction typically follows a familiar trajectory: an initial sharp selloff, a gradual decline over the following days, a potential minor rebound, and then a prolonged period of sideways movement.
This week, Webjet reported disappointing results for FY26, with key metrics such as revenue and total transaction volumes remaining largely stagnant compared to the previous year. However, their underlying net profit after tax (NPAT) dropped 24%, landing at $13.6 million, significantly missing market expectations by 22%.
Webjet also highlighted several challenges ahead:
1. Virgin is reducing its commercial agreements.
2. Changes in RBA surcharging regulations are likely to affect total transaction values (TTVs).
3. Variable revenue items, typically contributing $1-10 million annually, are expected to decline.
Despite Webjet’s shares trading at record low levels, it presents an intriguing opportunity for investors. Here are some key financial indicators:
– The stock currently trades at 45 cents, reflecting a market capitalisation of $170 million and a ~48% decline year-to-date.
– BGH and Helloworld had previously valued the company at 90-91 cents per share just six months ago.
– As of 31 March 2026, Webjet has $93.9 million in cash, no debt, and net assets of $138.4 million.
– The stock is trading at roughly 3.5 times trailing EBITDA, excluding the recently acquired Locomote business and the ongoing turnaround in its Car & Motorhomes segments.
This scenario illustrates that while there appears to be value in Webjet’s stock, further declines may not be out of the question, given the deteriorating fundamentals. Investors are advised to approach with caution, balancing the potential for recovery against the backdrop of ongoing challenges facing the company.
