AMADY - Amadeus IT Group: High Quality Business Reasonable Price

2024-02-10 07:16:17 ET

Summary

• Amadeus IT Group's Q3 2023 results show strong growth in revenue, net income, and FCF compared to the previous year.
• The company's management has shown a commitment to reducing long-term debt, which supports a long term bullish case for the stock.
• The recovery of international flights and business travel are important drivers for future growth, and Amadeus is well-positioned to benefit from these trends.
• Even when the price is not as cheap as it was months ago, the price is very decent considering the high quality of the business, its strong market position globally, and the high quality of the management.
• I rate the stock as a BUY.

I rate Amadeus It Group (AMADF)(AMADY) as a buy given its high-quality business model and its reasonable current stock price. I wrote about Amadeus in November 2022, when the stock was trading at 52 euros per share, establishing a bullish case as a long-term holding. In that article, I explained Amadeus' business model in detail, so if you want to know more about its business model and its main competitor, I suggest reading that article. In this article, I will briefly review the evolution of the business since my last article, assessing my previous predictions. I will re-calculate my intrinsic value, considering certain assumptions with more updated information.

Last results Q3 2023

As of September 2023, Amadeus delivered a revenue growth of 23% YoY, a growth in net income of 65% YoY, and a growth in FCF of 49%. These are good results, but we need to consider that Amadeus is recovering its pre-COVID levels in 2019 gradually. In this sense, in the first nine months of 2023 and 2019, 2023's revenue represents 97% of 2019's. Taking the same period of 9 months, 2023's net income represents 98% of 2019's net income, whereas 2023's FCF represents 116% of 2019's FCF....

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