Key Takeaways
Trainline PLC (LSE:TRN) shares fell more than 7 percent on Wednesday after the rail ticketing operator issued a disappointing revenue forecast for the current fiscal year, overshadowing a report of higher profit and sales.
The company’s results for the year ended February 28 showed solid growth, with Chief Executive Officer Jody Ford highlighting “strong execution” and “solid performance.” However, investors focused on a forward outlook that suggests a potential contraction in revenue.
For the full year, Trainline reported a 2 percent increase in revenue to £452.7 million, while net ticket sales grew 7 percent to £6.32 billion. Pretax profit rose to £114.3 million from £80.9 million in the prior year, and adjusted earnings before interest, tax, depreciation, and amortisation increased 11 percent to £176.6 million. The company did not disclose figures for earnings per share or how the results compared to consensus estimates.
The negative stock reaction was driven by the company’s guidance for the current fiscal year. Trainline projects revenue in a range of £440 million to £455 million. The midpoint of this range, £447.5 million, is below the £452.7 million revenue figure just reported, signaling a potential slowdown that has concerned the market. The company guided for adjusted EBITDA to be approximately 2.9 percent of net ticket sales.
The weak guidance has put the stock under pressure, erasing its gains for the year. The decline puts the stock at its lowest since March, testing investor confidence. Trainline’s next catalyst will be its first-quarter trading update, which will provide the first indication of whether the company can meet or exceed its conservative forecast.
This article is for informational purposes only and does not constitute investment advice.
