$TCG.L – Thomas Cook – finals

TCG (Thomas Cook) released its full year results today (http://is.gd/DuxSwY), sending the shares 9% higher to 107p.

Revenues were down £754m, but up £86m on a like-for-like basis. “Underlying” EPS is 8.9p, down from 11.3p last year. Net debt is £139m, down from £326m.

The Motley Fool wrote an article about TCG today (http://is.gd/4IfCed), saying: “with the winter season already being 58% sold, it appears to be well-placed to deliver continued strong performance moving forward … its shares have very appealing capital gains prospects”

What do I think it’s worth? It’s difficult to say, but I think TCG is a very weak business. Its median adjusted EPS over the last decade is ~10p, whilst its mean is 13.4p. Its current EPS seems to put it around about the median level. Given how poor TCG is, I’d probably give it a multiple of 10. So TCG may be worth around 100p – 130p.

Personally, I would say that it is not undervalued, although many will undoubtedly have different perspectives which are of equal validity.

Although I tripled my money on TCG a few years ago (thanks, Richard!), I wouldn’t invest in it now. It still has too much debt for my liking, and its returns on capital are too weak.

Just my opinion. I may be wrong.


About mcturra2000

Computer programmer living in Scotland.
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