Will Shares In Tui AG Beat easyJet plc, Unilever plc, Diageo plc And Next plc After Q1 Update?

Is Tui AG (LON:TUI) (LSE:TUI.L) a better investment than easyJet plc (LON:EZJ) (LSE:EZJ.L), Unilever plc (LON:ULVR) (LSE:ULVR.L), Diageo plc (LON:DGE) (LSE:DGE.L) and Next plc (LON:NXT) (LSE:NXT.L) after today’s investor update?

Tui AG
Tui AG

Tui AG (LON:TUI) (LSE:TUI.L) has released Q1 results to the stock market today. Investors are likely to be encouraged by turnover growth of 8.5%, with continued growth in the company’s hotel, cruise and concept brands. There have also been further merger synergies resulting in a reduction in the seasonal EBITA loss.

The company’s growth and investment strategy has made good progress in my view. The agreement to dispose of Travelopia for an agreed enterprise value of £325 million is 14.4x 2016 underlying EBITA, which I think represents a good deal for Tui.

Its current trading is in line with expectations, with continued growth in revenues and bookings in most Source Markets. The company plans further openings in its hotel and concept brands, as well as the launch of 2 cruise ships this summer. Based on its Q1 performance, its balanced guidance of at least a 10% rise in underlying EBITA in FY2017 has been reiterated. Therefore, its share price is 3.2% higher at the time of writing.

In the last month, Tui’s shares have risen over 4%. This is ahead of consumer stocks such as easyJet plc (LON:EZJ) (LSE:EZJ.L), Unilever plc (LON:ULVR) (LSE:ULVR.L), Diageo plc (LON:DGE) (LSE:DGE.L) and Next plc (LON:NXT) (LSE:NXT.L). Unilever is 2% lower, shares in Next are 1% down, Diageo is 2% higher, while easyJet’s share price has fallen over 8% in the last month.

In my view, Tui faces a tough future. I think its shares may struggle to make gains on a relative basis, since it is a cyclical company and the outlook for the global economy is difficult. However, I like its strategy and think it will perform well in the long run from an investment perspective.

I’d rather own Unilever and Diageo because of their defensive qualities. I think easyJet has a more resilient business model due to its budget offering, while Next has good cash flow which could provide its investors with high dividends. Therefore, although Tui does have some investment appeal, there are other stocks I’d rather own.

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