The Webjet Limited (ASX: WEB) share price has done remarkably well over the last six months. It has risen by around 50%. There are not many ASX shares that have done as well as that.
The S&P/ASX 200 Index (ASX: XJO) has only gone up by 8% over the past half-year period.
Despite all of the higher interest rates, Webjet has managed to deliver excellent performance in terms of shareholder returns.
But, I believe the business has a very promising future and I still think it's a buy for the long-term.
Reasonable valuation
Profitability is quickly returning to the ASX travel share's financials. By the 2025 financial year, it could be making a high level of profit for shareholders again.
In the 2023 financial year, it's expected to generate 15.4 cents of earnings per share (EPS), according to Commsec. Profit could approximately double in FY24 with an EPS of 31.4 cents.
The ASX travel share's profit could rise by another 28% in FY25 to 40.1 cents.
Now, these are just projections – EPS could be weaker or stronger than those numbers.
But, taking Webjet's FY25 forecast, it puts the Webjet share price at 18 times FY25's estimated earnings.
I think FY25 could be the first full 12 months that the global travel industry is able to operate as normal with normalised airline capacity.
One of the main reasons why I think that Webjet's valuation looks reasonable is because I think it can keep growing.
Growth expected
In the recent FY23 half-year result, Webjet said it has returned to pre-pandemic bookings.
WebBeds is Webjet's business-to-business (B2B) segment. In FY23, the EBITDA margin was over 55% – ahead of pre-pandemic levels. In the seasonal peak of July and August, it achieved its EBITDA margin target of 62.5%. The ASX travel share said that WebBeds is on track to exceed pre-pandemic profitability in FY23.
The company is expecting its underlying earnings to exceed pre-COVID underlying earnings in FY24.
Webjet's online travel agency business (OTA) has been gaining market share and it's also hoping that new technology called Trip Ninja could increase its share of the international flights market.
With WebBeds, the business sees a "massive global opportunity" – it's targeting $10 billion of total transaction value (TTV). To put that in perspective, the entire business saw TTV of $2.14 billion in the FY23 first half.
Webjet noted that WebBeds is now 35% more efficient on the metric of booking per full-time equivalent employee.
Foolish takeaway
I think the Webjet share price can climb from here over the long term, particularly if it keeps seeing good TTV growth and profit margin improvement. I believe it could continue to perform, even if the wider ASX share market stagnates.
