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Home / Blog / blog / Company Focus; Value Returns for Trainline Investors? 8-11-19

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Company Focus; Value Returns for Trainline Investors? 8-11-19

Investors in Trainline have had a glimpse of the track they’re on, as the train and bus ticket seller revealed its half year results.

The results were the company’s first financial statement since its IPO in June, and they revealed a 29% rise in revenue to £129m. It wasn’t enough to negate the costs of the June IPO however, and Trainline reported a loss of £89m meaning its shareholders have made a basic loss per share of 20.3p. Consequently, the ticketing platform’s shares fell more than three per cent, standing at 433.50p at the time of writing.

So, what does this indicate for Trainline – is it coming off the rails already or will it pick up speed before the end of its first post IPO year?

Its loss was made up of a £65 million payout for executives and senior managers, a £21 million float fee and charges for stock awards. Its sales and revenues, though, look quite healthy so far – Trainline’s app has been a success and inkeeping with the general shift towards e-tickets demonstrated by the way net ticket sales jumped 19 per cent to the end of August. The firm’s free cashflow has also increased from £2m to £60m and its adjusted earnings before interest, tax, depreciation and amortisation (Ebitda) almost doubled to £42m.

Trainline has stuck to its expectations of lower consumer revenue in the second half of the year with a predicted growth in overall revenue of up to the mid-20 percents. The platform has plenty of potential for growth – it taps into the current zeitgeist perfectly with its emphasis on electronic and smartphone ticketing, which will soon be the main way to purchase travel tickets. And while Trainline has competitors, their technological arsenal is generally not as sophisticated – National Rail, for example, has its own app but it is not as advanced as Ticketline’s. Retaining this competitive advantage, though, obviously means spending on technology, and some analysts have questioned the costs behind the platform and whether Trainline is generating sufficient profit growth to leverage these. Some have also asked whether the stock is overpriced – trading on almost 52 times earnings Trainline will need to consistently hit the high expectations of its investors.

It also faces a growing number of external threats – for example, the Rail Delivery Group is currently reviewing fares and if it ends up capping them this would impact on Trainline’s commission, which is a large part of its revenue. Other threats, including the prospect of rebidding for some of the major ticketing contracts and the possibility of renationalisation of the railways if Labour comes into power can also not be discounted.

Analysts are generally optimistic about these results though – Peel Hunt reissued its ‘hold’ rating on the stock and Barclays and Morgan Stanley both raised their price targets to 450p and 480p respectively. For the first post IPO results these seem respectable, with little to quibble about, although only time will tell if Trainline will provide cheap returns for its investors.

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This research is produced by Accendo Markets Limited. Research produced and disseminated by Accendo Markets is classified as non-independent research, and is therefore a marketing communication. This investment research has not been prepared in accordance with legal requirements designed to promote its independence and it is not subject to the prohibition on dealing ahead of the dissemination of investment research. This research does not constitute a personal recommendation or offer to enter into a transaction or an investment, and is produced and distributed for information purposes only.


Accendo Markets considers opinions and information contained within the research to be valid when published, and gives no warranty as to the investments referred to in this material. The income from the investments referred to may go down as well as up, and investors may realise losses on investments. The past performance of a particular investment is not necessarily a guide to its future performance.

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