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Highlights
- Qantas shares have surged 56% year to date, far outpacing the ASX 200’s 7% gain.
- Analysts highlight strong domestic travel demand and the potential return of dividends.
- Despite robust performance, experts offer mixed recommendations on buying Qantas stock.
Qantas Airways Ltd (ASX:QAN) shares have grabbed significant investor attention in 2024, as the company reports a remarkable turnaround. With shares trading at $8.34 in early afternoon trade today, Qantas stock has risen 0.9%, continuing its strong momentum. Year to date, the airline's stock has skyrocketed by 56%, far surpassing the ASX 200 Index’s (ASX:XJO) modest 7% gain.
However, with Qantas shares now trading 15% above their pre-COVID-19 levels, the question arises: Is the airline stock still a buy this November?
Expert Insights on Qantas' Performance
Harrison Massey from Argonaut, in an interview with The Bull, weighed in on Qantas’ stellar performance this year. "Qantas shares have rallied in 2024 on the back of strong domestic travel profitability and weakening crude oil prices," Massey remarked. He pointed out that Qantas shares have climbed from $5.35 on January 2 to $8.03 as of October 31—a 4% increase since that date.
Massey also emphasized the airline's stable travel demand, which has given Qantas a solid footing for the first time in years. "If it can continue to deliver solid international travel figures, the share price should hold up," he said.
Prospects of Dividend Returns
One of the key factors capturing investor interest is the potential reinstatement of Qantas' dividends. The airline last paid dividends in 2019, before the COVID-19 pandemic caused a severe downturn in the travel industry, slashing the share price by 33%. Back in 2019, Qantas offered a 4.5% fully franked dividend yield. As Massey suggests, “The consensus is the airline will re-instate a dividend as early as the first half of fiscal year 2025.”
A return to dividend payments could serve as a welcome incentive for investors seeking passive income from the airline giant.
Financial Results and Outlook
Despite the impressive stock performance, Qantas’ FY 2024 financial results present a mixed picture. The airline reported a revenue of $21.9 billion, marking a 10.7% year-on-year increase. However, profit dipped 16% from FY 2023, settling at $2.08 billion. Notably, investors seemed unfazed by the profit decline, as Qantas shares edged up 0.8% on the day the results were announced.
Qantas CEO Vanessa Hudson expressed optimism about the company's future. "Our strong financial performance and balance sheet will allow us to continue to invest in our largest-ever fleet renewal program," she stated. Hudson highlighted the benefits of these investments for both customers and employees while emphasizing the potential for shareholder returns.
Buy, Hold, or Sell?
Massey’s recommendation on Qantas stock remains cautious. Despite the airline’s promising performance and outlook, he issued a “hold” rating, suggesting a balanced approach for investors considering new positions in the stock.
