I think it is fair to say that 2016 was a year to forget for shareholders of Flight Centre Travel Group Ltd (ASX: FLT).
After its share price peaked at $45.37 in March, it has been nothing but downhill for this leading travel agent due to tough trading conditions and underwhelming full year profit guidance.
But with its share price hovering just above its 52-week low, is Flight Centre now in the buy zone?
I believe that as its shares are changing hands at under 14x estimated FY 2017's earnings according to CommSec, Flight Centre is definitely in the buy zone for those willing to make a buy and hold investment.
Although its guidance for underlying profit after tax of between $320 million and $355 million means it will be at best flat on last year's result, I believe the hard work management is doing will mean a return to profit growth from FY 2018 onwards.
This includes expanding into key markets through acquisitions and the roll out of cost controls globally which it expects to drive a stronger result in the second half of FY 2017 and beyond.
But an investment is not without risk. Short interest in the travel agent has been rising steadily and its full year guidance is heavily weighted to the second half. Failure to deliver on expectations could lead to its share price being driven lower still.
Thankfully I have confidence that this founder-led company will come up with the goods thanks to strong organic growth from the leisure and corporate travel markets.
As a result it could be an opportune time to snap up its shares and its generous fully franked 4.7% trailing dividend. Especially with Webjet Limited (ASX: WEB) and Corporate Travel Management Ltd (ASX: CTD) shares starting to look a little on the expensive side after massive gains last year.
