As the last rays of summer sunshine fade and many holidaymakers reluctantly pack away their swimsuits, I’m turning my attention to the TUI (LSE:TUI) share price. Is Europe’s travel titan destined for a winter slumber, or could there be an opportunity here? Let’s take a closer look.

A challenging few years

The firm has had a roller-coaster ride, worthy of its own theme park, in the last few years. Over the past year, the shares have climbed a steady 6.7%. But let’s remember that this is merely a gentle updraft in what has been a collapse of epic proportions. Since 2019, the shares have plummeted a jaw-dropping 78%.

The numbers

Despite disappointing performance in the market, the summer of 2024 has been a relative breath of fresh air for the company. After returning to profits in 2023, annual revenue grew over the last year by 23% to a hefty €22.22bn. Over the same period, as many firms in the hospitality and travel sector saw declining revenue, profits reached a respectable €539.3m.

With a price-to-earnings (P/E) ratio of only 5.4 times, there’s a decent gap between the firm and the average valuation of the sector, which sits at a whopping 27.3 times. I think there could be a decent opportunity here if the market decides the shares deserve to catch up with the performance of the company.

There’s plenty of room for growth if so. A discounted cash flow (DCF) calculation suggests as much as 74% growth before an estimate of fair value is reached. With annual earnings forecast to grow by a healthy 15.83% over the next five years, analysts are predicting an average 12-month price target of 739.79p, suggesting potential growth of 31.28%.

Of course, this isn’t guaranteed. I suspect there’s a good reason the market isn’t too certain these forecasts will be met.

A tricky sector

Let’s consider the potential turbulence ahead. The company’s debt-to-equity ratio stands at a dizzying 154.8%. This $1.9bn debt could become TUI’s own personal Everest if economic winds change direction, especially when interest rates are close to the highest they’ve been in decades.

As many of us know, the travel industry is notoriously fickle, susceptible to everything from geopolitical tensions to the whims of Mother Nature. One volcanic eruption or global crisis, and TUI’s attempt at a recovery could go up in smoke.

An uncertain future

As we bid farewell to summer 2024, TUI stands at an interesting moment. On one side, a path of continued recovery and growth beckons, leading to sun-soaked profits and happy shareholders. On the other, a rocky road of potential setbacks and challenges looms, threatening to send the share price tumbling.

For me, the TUI share price looks like a decent opportunity. Sure, the sector is a challenge, and the company’s balance sheet is far from ideal. However, with plenty of potential for growth, I’ll be taking on a small position at the next opportunity.