Recently, I’ve been keeping my eye on a FTSE 250 gem that’s quietly built up a head of steam. Trainline (LSE: TRN), the whizzy rail and coach travel platform, has delivered some impressive returns for shareholders lately.
A great year
Over the past year, the shares have rocketed up by a whopping 32%, leaving industry peers and the broader UK market in the dust.
So, what’s driving the company’s recent success? Well, in an age where convenience is king and our smartphones are practically glued to our hands, the user-friendly app and website have become the go-to for millions of travellers looking to book their journeys without the usual faff.
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Recent financial performance has been nothing to sniff at either. In its latest earnings report, management not only met but exceeded analyst expectations, showing some serious muscle in both revenue and profitability.
Eyes on the future
The firm has been steadily chugging into European markets, taking advantage of the continent’s patchwork of rail systems. As more countries jump on the digital ticketing bandwagon, our plucky British company is perfectly placed to scoop up market share.
And let’s not forget the green factor. With climate change hotter than a crowded commuter train in August, more people are opting for eco-friendly rail travel over gas-guzzling alternatives. This trend plays right into the company’s hands.
But wait, there’s more! Management isn’t resting on its laurels. The company’s constantly tinkering with its tech, rolling out nifty features like AI-powered journey planning and real-time disruption alerts.
Now, you might be thinking, ‘Surely after such a strong run, the valuation must be through the roof?’ The shares are currently trading with a price-to-sales (P/S) ratio of 3.4 times, which doesn’t seem too shabby given its growth prospects and market position.
Plus, analysts are pretty optimistic, with an average price target suggesting there could be over 40% more track ahead for the share price. Of course, analysts don’t always get it right, though a discounted cash flow (DCF) generally supports this. The estimated fair value is about 35% higher than the current price.
Risks
Of course, no investment journey is without its potential delays or even derailments. Trainline faces a huge amount of competition from both old-school travel agencies and tech behemoths eyeing up the digital travel space.
And let’s not forget, the travel industry can be as unpredictable as British weather. With rail strikes seemingly always on the agenda, and creaking infrastructure causing frustration on a daily basis, plenty of users are moving away from the rail network.
I’ll be buying
So, should I punch my ticket for this FTSE 250 express? Trainline could be just the ticket to provide me with exposure to the travel sector with a techy twist. With its digital savvy, impressive growth, and the world’s growing love affair with travel, it’s got a lot going for it.
Obviously, we can’t predict what the next few years holds for the sector, but with the company’s recent success and promising outlook, I think it’s well worth a closer look. I’ll be buying at the next opportunity.
