Trainline PLC

Trainline PLC (LON: TRN) is an FTSE 250 Index listed company that provides an advanced platform and application for train and bus ticketing.

Investment Rationale – SELL at GBX 267.60

• Profit Booking: Trainline’s stock price has jumped over 63% in the past month, and therefore, investors can book profit as per their risk-return profile.
• Continued Losses: During H1 FY22, Trainline continued to report operating and net losses, which can eventually impact the Company’s liquidity.
• Covid-19 Concern: As coronavirus cases have started resurging in Britain, it can impact the volume of travelers again.
• Overvalued Multiples: On a forward 12-month basis, key valuation multiples (EV/Sales, EV/EBITDA, Price/Book Value, Price/Cash Flow, and Price/Earnings) are overvalued against the Median of the Consumer Cyclicals sector.
• Record UK Inflation: British inflation hit a 30-year high of around 6.2% in February 2022, which may cause a further interest rate hike. It can dampen economic growth and hamper corporate profits.
• Technical Indicator: The momentum oscillator 14-day RSI (70.22) is in the overbought zone, and price can face retracement from the current levels.  

Recent News

• Positive Agreement on Ticket Commission: On 31 March 2022, Trainline unveiled an amendment to its third-party retail license agreement. Subsequently, it will enter a collaborative phase of engagement with the Rail Delivery Group, which would result in the reduction of the B2C online sales commission rate and the removal of central industry costs. Further, it should allow Trainline to invest aggressively in product innovation.

One Year Share Price Chart

 (Source: Refinitiv, Analysis conducted by Kalkine Group)

Valuation Methodology: Price/Earnings Approach (FY22) (Illustrative)

*Peers: Rightmove PLC, Auction Technology Group PLC, and Dalata Hotel Group PLC.

*All peers are LSE-listed Companies from the Consumer Cylicals sector.

Conclusion

Based on the attractive notional gains in the short-term, continued losses, macroeconomic instabilities, bearish technical indicator, coupled with the unfavorable Valuation conducted above, we have given a "SELL" recommendation on Trainline PLC at the current market price of GBX 267.60 (as of 4 April 2022, at 12:25 PM GMT+1). 

Note 1: The reference data in this report has been partly sourced from REFINITIV.

Note 2: Investment decisions should be made depending on the investors’ appetite for upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the Valuation has been achieved and is subject to the factors discussed above.

Note 3: Target Price refers to a price level that the stock is expected to reach as per the relative valuation method and or technical analysis taking into consideration both short-term and long-term scenarios.

Note 4: ‘Kalkine reports are prepared based on the stock prices captured either from the London Stock Exchange (LSE) and or REFINITIV. Typically, both sources (LSE and or REFINITIV) may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.’

Note 5: Dividend Yield may vary as per the stock price movement.

Disclaimer

References to ‘Kalkine’, ‘we’, ‘our’ and ‘us’ refer to Kalkine Limited.

This website is a service of Kalkine Limited. Kalkine Limited is a private limited company, incorporated in England and Wales with registration number 07903332. Kalkine Limited is authorised and regulated by the Financial Conduct Authority under reference number 579414.

The article has been prepared for informational purposes only and is not intended to be used as a complete source of information on any particular company. No advice or information, whether oral or written, obtained by you from Kalkine or through or from the service shall create any warranty not expressly stated. Kalkine does not intend to exclude any liability which it is not permitted to exclude under applicable law or regulation.

Kalkine does not offer financial advice based upon your personal financial situation or goals, and we shall NOT be held liable for any investment or trading losses you may incur by using the opinions expressed in our publications, market updates, news alerts and corporate profiles. Kalkine does not intend to exclude any liability which it is not permitted to exclude under applicable law or regulation. Kalkine’s non-personalised advice does not in any way endorse or recommend individuals, investment products or services for your personal financial situation. You should discuss your portfolios and the risk tolerance level appropriate for your personal financial situation, with a professional authorised financial planner and adviser. You should be aware that the value of any investment and the income from it can go down as well as up and you may not get back the amount invested.

Kalkine Media Limited, an affiliate of Kalkine Limited, may have received, or be entitled to receive, financial consideration in connection with providing information about certain entity(s) covered on its website.