The Sydney Airport Holdings Pty Ltd (ASX: SYD) share price gained today. But for investors with a longer-term horizon (2 plus years) the venerable blue chip still looks like it’s trading for a bargain at today’s $5.68 per share.
Like every travel share, Sydney Airport was smashed by the lockdowns and social distancing introduced to combat the spread of COVID-19. From its 2020 peak on 17 January through its trough on 19 March, the Sydney Airport share price dropped 48%.
Since that low, the share price has rebounded 25%, but that still leaves shareholders down 32% year-to-date. For comparison the S&P/ASX 200 Index (ASX: XJO) is down 9% in 2020.
At today’s share price, Sydney airport has a market cap of 14.5 billion.
What does Sydney Airport do?
Sydney Airport Holdings owns a 100% interest in Sydney Airport. The airport provides an international gateway connecting to more than 90 other airports around the world.
Headquartered in Sydney, the company provides aeronautical, retail, property, car rental, and parking and ground transport services through its 2 main business units: Aviation (Sydney Airport) and Leasing & Advertising Opportunities.
Sydney Airport shares began trading on the ASX in 2002.
Why does Sydney Airport share price look like a bargain?
Forward looking investors have begun to accumulate the company’s shares. But as mentioned above, Sydney Airport’s share price is still down 32% in 2020.
With its revenues slashed due to a virtual halt in air travel, it continues to operate at a net loss. But that won’t be the case indefinitely. Once the coronavirus is brought under control or eradicated, airlines will take to the air again. And I believe Sydney Airport’s prime role in domestic and international travel should see its share price surpass its January highs.
Nathan Bell, the head of research and portfolio management at Investsmart, has a keen eye on Sydney Airport shares as well. He says it, and Auckland International Airport Limited (NZE: AIA), represent good value at their current price. According to Bell (as quoted by the Australian Financial Review):
People are once again going on holidays in the northern hemisphere, which is another good omen for this pair of airports. Vietnam, Taiwan and Korea recently reopened their domestic borders and passenger numbers are 10-20 per cent above 2019 levels, suggesting pent-up demand.
The Sydney Airport share price closed up 1.24% today.
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More reading
- Top ASX Stock Picks for September 2020
- These market veterans believe a share market pullback is coming. Here’s their surprising advice…
- This ASX-listed company makes $5.7 million per employee
- ASX 200 Weekly Wrap: Earnings drag ASX back to reality
- Is this ASX 200 market too greedy right now?
Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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