GBTG - Global Business Travel Group: Weak Profitability But CWT Acquisition Looks Promising

2024-05-11 09:09:34 ET

Summary

• FCF generation has been weak despite the business showing strong growth post-pandemic.
• The CWT acquisition shows a lot of promise but has potential execution risks.
• The valuation is cheap for this market leader, but the risk-reward is not yet favorable for investors.

Investment Thesis

Global Business Travel Group ( GBTG ) is the largest player in the managed business travel market and is now in the process of acquiring its second largest competitor, CWT . Despite its dominant position in the market, its dominance is yet to show up in the company's profit margins. With revenue expected to land close to $2.5 billion this year, free cash flow is only expected to be $100 million. With nearly $0.9 billion in debt, the company needs to improve its profitability to assure investors that its financial position is healthy....

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