The Corporate Travel Management share price is up 65% in a month: Is it too late to invest?

The best performer on the S&P/ASX 200 Index (ASX: XJO) over the last 30 days has been the Corporate Travel Management Ltd (ASX: CTD) share price by some distance.

Since this time last month, the corporate travel specialist’s shares have jumped over 65% higher.

Why is the Corporate Travel Management share price on fire right now?

Investors have been fighting to get hold of the company’s shares in recent weeks following the release of a better than expected full year result for FY 2020.

For the 12 months ended 30 June 2020, Corporate Travel Management reported underlying earnings before interest, tax, depreciation and amortisation (EBITDA) of $65 million.

While this was a sharp decline on a year earlier, it was far better than what many of its travel peers reported. Webjet Limited (ASX: WEB), for example, posted an EBITDA loss of $91.3 million for FY 2020.

Corporate Travel Management’s second half was supported by cost cutting measures and the provision of travel solutions for essential workers during the pandemic.

Balance sheet strength.

Another positive was the company’s balance sheet. Despite not undertaking a capital raising like Webjet and Flight Centre Travel Group Ltd (ASX: FLT), Corporate Travel Management still finished the year with a very strong balance sheet. It reported a net cash balance of $55 million and no debt on its book. It also has $180 million available to it from a committed undrawn facility.

Given that its cost base is currently $13.5 million (or $16 million without government support), the company clearly has more than enough liquidity to ride out the storm. Not that it looks likely to burn through much more cash given the improving trends. 

Improving trends.

As alluded to above, I think the improving trends the company is experiencing are what got investors most excited.

Although it was unable to provide guidance, management made a few comments on current trading conditions.

It said: “July activity continued higher month on month versus June suggesting a broad-based recovery in corporate activity is underway in the northern hemisphere, with corporates back at work late August.”

And despite July traditionally being its quietest month of the year, the company only recorded an underlying EBITDA loss of $2.2 million.

Should you invest?

Overall, I think things look very promising for Corporate Travel Management.

And while I’m not personally in a rush to invest just yet, I do feel it could prove to be a great long term investment option for patient investors.

More reading

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• The one type of ASX company that outperforms all others
• Why Afterpay, Flight Centre, Helloworld, & QBE shares are tumbling lower
• These were the best performing ASX 200 shares in August
• Leading brokers name 3 ASX shares to buy today

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Corporate Travel Management Limited and Webjet Ltd. The Motley Fool Australia has recommended Flight Centre Travel Group Limited. 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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