Is the Webjet Limited (ASX: WEB) share price a buy? It has been an amazing performer recently.
In just one month the Webjet share price has risen by 94%. There have been other shares that have recovered strongly from the coronavirus lows like Afterpay Ltd (ASX: APT), but Webjet is one of the ones that are cut off from almost all of the customer base.
When Webjet did the capital raising it was planning for the eventuality of needing to survive until around the New Year without any material revenue. It doesn’t seem that dire now.
But things seem to be getting back to normal quicker than expected. Travel within each Australian state is being encouraged. There’s plans for travel across the entire country. There will hopefully be a travel link with New Zealand sooner rather than later. Things are looking up.
Does the Webjet share price represent good value?
It was only two weeks ago when I said that the Webjet share price was cheap at a share price of $3.24. Since then it has risen around 35%.
Between now and then I said it might be wise to take some profit off the table. I’m even more of that belief now. Remember that there are a lot more Webjet shares on issue that there used to be, so future earnings will be shared with more shares.
At the moment there still isn’t much travel going on. The coronavirus seems as though it’s going to be around in the world for some time, so international travel could be very limited until 2021.
In 2030 I think we’ll be looking at a much higher Webjet share price. But I worry that today’s share price may be too optimistic. All of the coronavirus impacts are still to play out. Retirees may be less willing to leave their respective countries right now. Earnings may not bounce back as much in the near term as expected with this share price.
I think I’d rather invest in other shares that seem better value for the profit they’re going to generate in the rest of 2020.
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More reading
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- Why Cann, IAG, Monadelphous, & Webjet shares are storming higher
- Is it too early to buy Webjet shares?
- ASX 200 jumped higher, rises more than 2%
The post Up another 5%: Is the Webjet share price a buy? appeared first on Motley Fool Australia.
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