Amadeus shares continue to soar as company reports first half results
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Amadeus shares continue to soar as company reports first half results

Travel technology group Amadeus reported earnings for the first half of 2017 last Friday, demonstrating a strong underlying business that justifies the meteoric ascent of its share price this year. Amadeus has been an outperformer for more than just the last seven months, in fact. Since the company went public in 2010, its share price has more quadrupled in value.

In 2017 alone, Amadeus’ share price has already appreciated by 36%

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SOURCE: Yahoo Finance

Amadeus has managed to grow its revenues pretty much every year, and the first six months of 2017 saw it continue this trend. Its second quarter revenue rose by 7% overall (matching the Street’s expectations), but a look inside its two prominent arms – distribution and IT services – reveal a stronger proposition than the headline figure might suggest.

Amadeus’ distributions business – which includes the booking, management, and distribution of airline tickets – came in slightly under expectations, showing 4% growth. Nonetheless, investors shouldn’t be too concerned: expectations were very high. Consider that air bookings growth has slowed to an underwhelming 2.1% thanks to industry headwinds, and it is clear that Amadeus is outperforming the wider market. It’s also clawing its way to the top that market: Amadeus has gained another 0.5% of all travel agency share bookings to 43.6%. In 2012, it had 39% of that market.

The standout for Amadeus this time around, though, was its IT solutions business – a segment which includes passenger management from check in onwards as well as customer rewards schemes. This division saw a revenue rise of 14%, beating forecasts by 1%. This strong growth was pushed by a 19.8% rise, for the second quarter of the year, in the number of passengers boarded with the system. That’s taken against the comparable quarter in 2016, and puts Amadeus’ total number of passengers managed for that three months at an impressive 753 million.

Disclosure

Dominion holds Amadeus IT in its Global Trends Ecommerce Fund. 


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