Morningstar

Morningstar, Inc.

Equity Bottom-Up

Our AUD 5.00 per share fair value estimate for no-moat-rated Qantas is unchanged following its third quarter update. The shares currently trade at a slight premium to our valuation. The company reported fiscal 2019 third quarter revenue of AUD 4.4 billion, a 2.3% increase on the previous corresponding period, despite the shift in the timing of Easter which fell in the fourth quarter of fiscal 2019. Unit revenue increased by 4%, and the firm remains on track to offset higher fuel costs. After…

No-moat-rated Qantas has had a challenging start to fiscal 2019, reporting an interim underlying profit before tax of AUD 780 million, down almost 20% on the previous corresponding period. Unsurprisingly, the main driver of the earnings decline was the AUD 416 million increase in fuel cost during the first half. The company was able to pass through some of the higher fuel price, as evidenced by the 6% increase in average unit revenue, although it was unable to fully offset the 10% growth in unit…

Despite having fallen by approximately 20% in the past three months, shares in no-moat-rated Qantas are still trading slightly above our unchanged AUD 5.00 per share fair value estimate. Airlines are highly cyclical and after enjoying three years of low fuel prices, healthy consumer confidence, and lacklustre competition, we believe Qantas has passed peak cycle conditions. We have trimmed our fiscal 2019 and 2020 EPS estimates by around 7% on average to AUD 0.60 and 0.69 per share, respectively…

Fiscal 2018 was another stellar result for no-moat-rated Qantas, with underlying profit before tax up 15% to AUD 1.6 billion, despite a 25% jump in the jet fuel price. The key earnings drivers were strong ticket revenue across Qantas Domestic, Qantas International, and Jetstar, which each increased revenue by 5%-8%. EBIT margins were also solid, expanding by 60 basis points at the group level to 10.5%, reflecting ongoing transformation benefits. While this performance was consistent with our…

Our AUD 4.00 per share fair value estimate for no-moatrated Qantas is unchanged, following its third-quarter fiscal 2018 trading update. The firm guided to fiscal 2018 underlying profit before tax of between AUD 1.55 billion and AUD 1.60 billion. We maintain our AUD 1.56 billion fiscal 2018 forecast, at the lower end of the guided range, and continue to project low-single-digit earnings per share growth on average during the next five years.
Analysts: Daniel Ragonese and Brian Han

Australia

Qantas Airways Limited provides transportation of passengers through two airlines including Qantas (full service carrier) and Jetstar (low cost carrier), operating international, domestic and regional services. The Company also includes Qantas Frequent Flyer and Qantas Freight which generates diverse revenue streams and adds value for customers and investors.

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