About: Webjet is a leading online travel agency in Australia and New Zealand. The business also has operations globally. The company’s two main segments are B2C Travel (Business to Consumer) and B2B Travel (Business to Business). B2C Travel operates two main brands webjet.com.au which is Australia and New Zealand’s number one online travel agency and Online Republic which specialises in bookings of cars, cruises and motorhomes. B2B Travel operates WebBeds which provides a solution for the travel trade to access a wide range of hotel inventory at the lowest possible prices.

Why it’s in the portfolio: Webjet provides the portfolio with an opportunity for growth, as the company looks set to gain market share over the next few years. The company is targeting 3x underlying market growth in the B2C business and 5x underlying growth in its B2B business, which provides considerable upside opportunity for the share price.

Fundamentals: Webjet currently trades on a forward earnings price-to-earnings ratio of around 13-15x and is expected to grow earnings at above 10% per annum for the next couple of years. Webjet is expected to pay a fullyfranked dividend yield of around 3.5%- 4% at a modest pay-out ratio of around 35%. The business has modest levels of debt and a relatively robust balance sheet.

What could go wrong: The main risk factors that investors need to be aware of with Webjet are that it operates in the travel industry and may therefore be subject to economic cycles and changes in demand for domestic and outbound travel. The company may also be subject to changes in commissions from airlines as well as any disruptive threats from other from competitors.