TUI shares tipped as a ‘buy’ for investors

13th August 2015

As TUI reports its interim year results Helal Miah, investment research analyst at The Share Centre, explains what they mean for investors…

On Thursday TUI reported very encouraging third quarter results, which have pleased investors as the shares have risen by 8% on the market this morning. The group’s revenues for the period increased by 6%, to €5.1bn, whilst its operating profits jumped by 18%.

These positive figures came about despite the impact of the Tunisian terror attacks, which cost it about €40m and there was lots of uncertainty due to the Greek debt crisis. However, in the most recent weeks, travellers have resumed confidence and bookings to Greece have picked up again.

Bookings for cruises, hotels and resorts from customers in the UK have generally been very strong, whilst Germany seemed to be a weak point for the travel group. Holidays for summer 2015 were 86% sold whilst Tunisian traffic is being diverted elsewhere. Management remains confident of delivering 12.5-15% operating profits growth for the full year of 2015 and we believe the economic backdrop remains supportive of further growth.

Due to encouraging factors such as the above, we continue with our ‘buy’ recommendation. This stock may be a good choice for investors seeking a mixture income and capital growth, who are willing to accept a medium level of risk.

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