It's a sector sell off. HLO, CTD and FLT all down on recessionary fears and higher rates.
But as JPM point out and as I've said in a previous post, even with economic headwinds, the demand side is better than what we went through with covid when the industry was virtually shut.
One way of thinking about it is that we're comping against periods where just 10-20% of the market was open (or to say it another way, 80% was closed).
This is multiples of an impact of any recession. So even with headwinds and higher rates, the travel market should still be significantly better than what it was previously. Perhaps the market had priced in some recovery and is now readjusting - that could be a consideration...
BUT...
Let's not forget that HLO has a market cap of $203.1m and an EV (with CTD shares included) of
just$83.5m, generating FY23 EBITDA of $22m to $26m.
That's
<4x EV/EBITDA for those playing along at home compared to a long term EV/EBITDA average of 9-10x.
Just remember, the company is sitting on
cash and CTD shares worth $140m (plus debt of $21m). Higher interest rates on that HUGE cash pile is actually a positive. GLTAH
(20min delay)