Is it advisable to put money into Trainline?
Trainline (LSE: TRN), a UK-based company specializing in rail ticket sales, is a strong long-term investment candidate, according to recent assessments.
Key factors supporting this view include:
- Financial Performance: Trainline reported a high return on equity (ROE) of 21% in 2025, significantly above the travel sector average of 8.7%, indicating efficient capital use. The company also demonstrated a 71% net income growth over five years and operating margins of 21.38%, supporting robust profitability.
- Growth and Innovation Strategy: The company reinvests all profits into AI-driven innovations and international expansion, aiming to boost operational efficiency and unlock new revenue streams. Its revenue growth rate stood at 6.6% despite economic challenges, signaling resilience.
- Market Valuation and Risks: Although Trainline’s price-to-earnings (P/E) ratio is around 21.79 with a PEG of 2.14, indicating a somewhat premium valuation, certain metrics like an extremely high forward P/E reported (over 1200 in one source) may reflect market anticipation of future growth but also inherent uncertainty. The stock shows volatility (beta 1.38) and carries debt of approximately £158M, posing risks alongside external factors like algorithm changes from Google affecting online visibility.
- Investor Confidence: Recent share buybacks and a current analyst "Buy" rating with a price target near £445 imply confidence from insiders and analysts in Trainline’s longer-term prospects. Insider ownership remains relatively modest at about 4%.
- Stock Price Overview: As of August 2025, shares traded around 267.8 GBp, with a 52-week range from ~250 to 435 GBp, indicating both volatility and upside potential.
In summary, Trainline exhibits strong operational and financial health with a clear growth focus, making it a potentially good long-term investment. However, investors should consider valuation premiums, market volatility, and exposure to external risks before committing.
The author suggests going long on Trainline’s shares at the current price of 404p with a stop-loss of 254p.
It's worth noting that Trainline has faced criticism from the RMT trade union, who accused the company of ripping off customers and not properly updating timetables to account for delays. However, the RMT represents those who work in station ticket offices, so their criticism may be biased.
Despite the criticism, Trainline's popularity suggests that it is still considered a valuable service by its users, with many feeling it delivers a greater degree of convenience compared to ticket machines.
The valuation of Trainline's shares is 24 times the forecast earnings for 2025. The author also believes that the chances of the UK government building its own app for the rail network are low.
This assessment is based on financial data and market conditions up to August 2025.
- Technology plays a significant role in Trainline's growth strategy, as the company reinvests all profits into AI-driven innovations, aiming to boost operational efficiency and unlock new revenue streams.
- In the realm of finance and investing, Trainline's shares could be an interesting consideration for long-term investors, considering its strong financial performance, clear growth focus, and lower chances of government competition in the rail app market.
