On the brink of bankruptcy just two years ago, tour operator Thomas Cook's (TCG) turnaround has been phenomenal. It has grown revenue, slashed costs and underlying operating profit soared by 49 per cent to £263m last year - far more than expected. Adjusted pre-tax profit, meanwhile, doubled to £118.2m, net debt almost halved and even more savings have been found. As a result, Cook's shares have soared, but the recovery story has much further to run.
That's certainly how the numbers have been interpreted in the City. Broker Credit Suisse expects adjusted pre-tax profit of £206m in 2014, doubling adjusted EPS from 4.9p to 10.8p. It has increased forecasts for 2015 by 6 per cent to 16.2p and by 12 per cent to 17.9p the year after. That's because Cook has found an extra £40m of savings and now targets £440m of cuts by 2015. And, incredibly, a further £440m of cuts have been pencilled in by 2018, too. If Cook gets it right, the shares could be worth up to 272p, says Credit Suisse.