Amadeus’ Network, Efficient Scale, and Switching Cost Advantages Intact After Solid 2016
Narrow-moat Amadeus reported solid 2016 results that were in line with our model. That said, we plan to increase our EUR 37.50 fair value estimate by midsingle digits because of the time value of money, higher air traffic industry growth in 2017, and stronger contribution margins in the company’s IT segment next year. We see shares of Amadeus as slightly overvalued, but narrow-moat Travelport, which trades at a more than 20% discount to our fair value estimate, has an attractive margin of safety...Amadeus is a transaction processor for the global travel and tourism industry. Co. provides transaction processing power and technology solutions to both travel providers (including full service carriers and low-cost airlines, hotels, rail operators, cruise and ferry operators, car rental companies and tour operators) and travel agencies (both online and offline). Co. acts both as a worldwide network connecting travel providers and travel agencies through a processing platform for the distribution of travel products and services (through the Distribution business), and as a provider of a portfolio of IT solutions which automate certain business processes (through the IT solutions business).
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.
Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
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