Holiday operator TUI Travel (TT.) falls 2p to 382p despite posting record underlying operating profit in the financial year to 30 September.

Pre-tax profit is up 21% to £473 million, while basic earnings per share rise 19% to 30.8p. The running Shares Play of the Week is rewarding shareholders with a 15% hike in the dividend.

After what chief executive officer (CEO) Peter Long described as an 'outstanding' year, TUI says the group's strategy of delivering unique holidays sold directly to customers has been' the right one'.

Shares in the £4.3 billion cap started the day brightly at 397p before sliding to 380p and then retracing to 382p by lunchtime.

While the share action might suggest some year-end profit-taking on the back of record underlying profits across the business as the group's growth roadmap target was exceeded, this might not be the full story.

Broker Panmure Gordon remains a fan, leaving its 'buy' recommendation unchanged with target price of 475p. Analyst Karl Burns reiterated the broker's advice maintaining that 'shareholders will receive at least a double digit return per annum from EPS (earnings per share) and DPS (dividend per share) growth.'

Furthermore, Burns believes 'TUI Travel holds the potential to see a re-rating, currently trading on a 2014E EV/EBITDA (enterprise value to earnings before interest, tax, depreciation and amortisation) of just 4.8x. He also reckons the holiday operator will return cash to shareholders in the not too distant future given the balance sheet strength and cash generation.

Investec's James Hollins is less sanguine. He welcomes the results of course but maintains that 'one key takeaway is guidance of unchanged first-half of the 2014 financial year winter losses (the reported number is forecast to see higher losses due to the timing of Easter), placing pressure on second-half trading (tough competition) to meet the guided +7-10% year-on-year EBIT (earnings before interest and tax) increase.' Hollins maintained the broker's DCF (discounted cash flow)-based 'sell' recommendation with a price target of 350p.

Issue Date: 10 Dec 2013