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Shares in FTSE 250 artificial intelligence (AI)-driven ticketing and travel firm Trainline (LSE: TRN) are down 36% from December. This resulted from UK government plans to centralise train ticket sales under a single website operated by the newly envisioned Great British Railways.
On a positive note for customers, this aims to simplify the currently Byzantine complexity of UK train fare structures. On a negative note for Trainline, the UK’s its biggest market with 18m active customers.
However, at the same time as this centralisation is being planned in the UK, Europe’s moving in the opposite direction. Specifically, the European Union’s ‘Fourth Railway Package’ requires all 27 member states to open their passenger rail markets to competition.
Aside from its dominant market position in the UK, Trainline also happens to be Europe’s leading train and coach app. Consequently, the firm’s increasingly focused on investing for growth on the continent.
How has this impacted the latest results?
In its full-year 2025 results released on 7 May, the firm saw overall net ticket sales up 12% year-on-year to £6bn.
However, in Spain its net ticket sales have nearly tripled in two years, to €199m (£173m). Trainline’s share of the top five aggregated routes increased from 5% to 12% over the period. And its brand awareness in the country jumped from 8% to 31%.
These rises followed several new initiatives by Trainline. These included focusing on routes where there was greater carrier competition and consequently more fare and timetable variations.
This growth model is one that Trainline will be rolling out in suitable locations across Europe. According to the firm, the newly liberalised routes in Europe will be worth €12bn by 2030. This is almost three times the size they are now.
The firm used its Spanish growth model most recently in Southeast France, which has seen greater carrier competition between Paris, Lyon and Marseille. In its 11 September Q2 2025 figures, this strategy delivered sales growth in the region of 34%. Over the first half as a whole, total net ticket sales rose 8% to £3.25bn.
Given these factors, the firm now expects full-year adjusted core profit at the top end of its 6%-9% forecast range.
A risk to this is increased competition in the sector. However, analysts forecast that its profits will increase by an average of 11.1% a year to end-2027.
Are the shares set to soar?
Earnings growth ultimately drives a firm’s share price higher. The key question is: by how much is it likely to rise?
In my experience, an asset’s price increases over time to its fair value, and this reflects the underlying business fundamentals.
The discounted cash flow (DCF) model highlights exactly where any stock price should be trading, based on cash flow forecasts for the underlying business.
For Trainline shares, the DCF shows them to be 67% undervalued at their current £2.84 price. Therefore, their fair value is £8.61.
Although I think the stock will soar, it is not for me as it pays no dividend. This is important to me as I look to these to allow me to increasingly reduce my working commitments.
However, I think it is well worth considering as a straight growth play for investors with no such requirement.
