Analysts emphasize that the company remains afloat without the need for new partners
eDreams Odigeo has taken off 5.54% on the stock market today with a return to profits in its first fiscal quarter, closed on June 30, a period in which it earned 5.3 million euros compared to net losses of 6.9 million of euros a year earlier, with a year-on-year improvement of 7% in the margin over revenues thanks to the diversification strategy and new income model in which the online travel agency has been immersed.
The accounts reported by eDreams, which is quoted in the Continuous Market, have been received “very positively” in the market since the first steps of the session, both for the benefit and for the reduction of indebtedness, with increases of 4.5% for later shoot 6.5% before reaching the half session and close with an increase of 5.54%, to 4.19 euros per title.
During the day, the titles of eDreams ranged from a minimum value of 3.91 euros to a maximum of 4.39. During the session, 766,643 shares were exchanged for an effective amount of 3.23 million euros.
So far this year, the maximum level reached it on March 7 (5.6 euros per share) before the possible exit of the Permia and Ardian funds, main shareholders. The rumors of auparon to eDreams 50% in the market, to fall then almost 29%. “The market felt disappointed as many investors had entered into the value waiting for a takeover bid,” says Felipe López, an analyst at Self Bank, told Europa Press.
The company presented, a few months ago, the results of last year at the end of the fiscal year without convincing the market too much. That day the actions of eDreams Odigeo plummeted more than 10% in the market being penalized by the presentation and instability in their balance sheets, analysts remember. “The company is demonstrating that they can stay afloat without the need for new partners,” says López.
“The tables have changed, especially with regard to an improvement in the consolidation of their balance sheets and a consistency and consolidation not only of their product diversification, but also because of the improvements in their functionalities”, highlighted the analyst Daniel García, of XTB.
The change in the business model implemented by eDreams Odigeo to diversify its revenue sources with new products that generate more margin (dynamic packages, car rentals and vacation products) has led to “weak results in revenues but with an improvement in Ebitda”, according to Bankinter analysts.
Thus, a negative impact is seen in the short term, both due to the temporary decrease in reserves and the rebound in expenses in this transition to the new model. However, they emphasize that despite the investment effort the company continues to reduce leverage. “In our opinion, the evolution is favorable but remains at high levels and far from the net cash position of almost all its peers,” they say.
In this line, from Self Bank highlight that the continued effort of eDreams Odigeo to reduce debt has been applauded by rating agencies (recently Moody’s that raised its ‘ratings’ from B2 to B1 and still considers it a junk bond). “It is important that he is achieving a more healthy balance, since this will allow him to address the purchase of some company to be able to boost growth,” says López.
The greatest mistrust of value comes from an income that “does not grow as much as it should considering that it operates in a buoyant sector”. “The reserves have barely increased 1%”, points out López, who considers that for this reason the shares are quoted with a price-benefit ratio of only 13X, something unusual in a company with its characteristics.
eDreams Odigeo expects a markedly soft growth of the margin on revenues and a reduction in both reserves and adjusted Ebitda in the first half of fiscal year 2019, with an improvement in the second half of the fiscal year. In spite of this, for the full year it is ratified in its forecasts: an adjusted Ebitda of 118 million and some reserves of 4% lower or flat in the year.