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TUI earnings: how will results affect the share price?

TUI’s brightening technical outlook is supported by good earnings forecasts and a relatively low valuation.

TUI Source: Bloomberg

When is TUI’s earnings date?

TUI reports earnings on 11 December, covering its full financial year.

TUI earnings – what does the City expect?

TUI is expected to report a 0.3% drop in revenue, to €19.5 billion, while pre-tax profit is forecast to fall to €704 million, from €1.03 billion a year earlier. Adjusted earnings per share (EPS) are expected to fall 30% to 81.7 cents.

TUI’s earnings have climbed since in 2014, representing a steady improvement in global gross domestic product (GDP); indeed, TUI’s earnings have outpaced global GDP growth for eight years in a row. Recent trading has also been strong, but performance has been marred by the grounding of the 737 Max fleet due to safety concerns. However, the end of Thomas Cook offers some opportunities for the firm to pick up new customers, as well as reducing direct competition. In the longer-term, however, Thomas Cook’s problems affect the whole industry, and TUI’s attempts to provide differentiation through optional upgrades may help it to stand out.

At present, TUI trades at 9.7 times forward earnings, below the five-year average of 11.8. The shares hit a low of 6.8 times forward earnings earlier in the year, their lowest valuation in over five years. In addition, the shares have a dividend yield of 6.1%.

How to trade TUI’s earnings

TUI’s 14-day average true range (ATR) has risen since the beginning of December, although at 29.3 it is still below the 35 seen in late October. Overall volatility has been relatively low, since June, when a steady recovery in the shares began.

The average move on results day is 3.6%, and half-year results on 15 May saw the shares rise 2.76%.

TUI shares – technical analysis

TUI dropped sharply in 2018, falling from a peak near £17 to £7 by May 2019, but since then have steadily recovered some of the lost ground. The price has established a series of higher highs and higher lows over the past half a year, with a retracement from the November high seeing it fall below the 50-day simple moving average (SMA) of £10.14. The recent drop has pushed daily stochastics back towards oversold levels, and a bullish crossover here may provide a fresh buying opportunity.

TUI chart Source: ProRealTime
TUI chart Source: ProRealTime

TUI climbs as outlook improves

The decline in TUI in 2018 and 2019 was relentless, but it seems to have found a low, with fresh gains since May. Earnings are expected to improve, while the technical outlook is much more bullish. The weakness into earnings may also provide a buying opportunity for those looking to exploit continued gains.

The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer.

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