Will the Sydney Airport share price outperform again in 2020?

The Sydney Airport Holdings Ltd (ASX: SYD) share price has outperformed in 2019, but can it pull the same trick twice in 2020?

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Sydney Airport Holdings Pty Ltd (ASX: SYD) share price has been climbing higher in 2019 and has outperformed the S&P/ASX 200 Index (INDEXASX: XJO) by a significant margin.

The group's shares are up 35.79% since the start of the year, while the benchmark Aussie index has gained 22.64% in the same time.

But while 2019 has been a bumper year for the Aussie airport group, what's the outlook like for 2020?

Why the Sydney Airport share price can outperform in 2020

The big driver for Sydney Airport earnings comes from its passenger numbers.

Sydney Airport's half-year earnings were propped up by strong Aeronautical and Retail segment performance.

The Aussie airport's half-year revenue climbed 3.4% higher compared to FY18 and totalled $797.1 million in 1H 2019.

The company's earnings before interest, tax, depreciation and amortisation (EBITDA) climbed 4.1% higher to $649.2 million despite a 0.2% drop in passenger numbers to 21.6 million.

Sydney Airport reported 21.6 million total passengers for the half-year ended 30 June 2019 (1H19), down 0.2% on the prior corresponding period (pcp).

International passenger numbers climbed 1.9% higher for the Aussie airport, which helped to offset softer domestic passenger numbers.

Those passenger numbers are what I'd be keeping an eye on as we head into 2020.

Record-low interest rates from the Reserve Bank of Australia (RBA) could provide a good tailwind in 2020. The RBA has already slashed rates to 0.75% per annum but some pundits are tipping rates to go as low as 0.25% p.a. next year.

Lower rates should theoretically mean more financial relief and more spare cash to splash. That could be good news for Sydney Airport as the number of domestic travellers could climb higher.

Is 2020 the time to buy in?

The technical environment looks alright for Sydney Airport as we head into 2020. We're still seeing strong tourism from China internationally and domestic numbers look relatively stable.

The Sydney Airport share price could be at the right price if passenger numbers hold, with the current 4.32% dividend yield providing some income in the meantime.

Motley Fool contributor Kenneth Hall has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Sydney Airport Holdings Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Gainers

A woman's hand draws a stylised 'Top Ten' on a projected surface.
Share Gainers

Here are the top 10 ASX 200 shares today

It was a sobering end to the week's trading this Friday.

Read more »

Man holding Australian dollar notes, symbolising dividends.
Share Gainers

How a $9k investment in this ASX All Ords stock ballooned to $35,234 in just 3 years!

Shares in the ASX All Ords stock have rocketed even as it’s paid out market-beating dividends.

Read more »

Two colleagues at work looking at a tablet and smiling at a rising share price.
Share Gainers

Why AIC Mines, Bendigo and Adelaide Bank, Patriot Battery Metals, and Vulcan Energy are racing higher today

These shares are ending the week in a positive fashion.

Read more »

Emotional euphoric young woman giving high five to male partner, celebrating family achievement, getting bank loan approval, or financial or investing success.
Share Gainers

Guess which ASX lithium share just leapt 13% on major financing news!

Investors are bidding up the ASX lithium share on the back of major financing news.

Read more »

A neon sign says 'Top Ten'.
Share Gainers

Here are the top 10 ASX 200 shares today

The ASX 200 was on fire today, with almost every sector surging.

Read more »

a man sits back from his laptop computer with both hands behind his head feeling happy to see the Brambles share price moving significantly higher today
Share Gainers

Why Aristocrat Leisure, Graincorp, Incitec Pivot, and Patriot Battery Metals shares are rising today

These shares are having stronger-than-average sessions on Thursday. But why? 

Read more »

Doctor doing a telemedicine using laptop at a medical clinic
Share Gainers

Guess which ASX healthcare stock just exploded 63% on Federal budget funding news!

Investors are bidding up the ASX healthcare stock amid extra funding in the Federal budget.

Read more »

Modern accountant woman in a light business suit in modern green office with documents and laptop.
Share Gainers

Here are the top 10 ASX 200 shares today

It was back to the races for ASX shares this Wednesday.

Read more »