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Stobart's new growth engine

RESULTS: Trucks are Stobart’s bread and butter, but airports, biomass and property development is where the real growth is
May 17, 2012

A weak economy and higher fuel prices dented profits at Stobart’s core trucks division and meant slower than expected growth last year. Yet prospects are good and more dynamic divisions are beginning to bloom.

IC TIP: Buy at 124p

Now in the second year of a four-year plan, chief executive Andrew Tinkler calls Southend Airport, which the group owns, the “jewel in the Stobart crown”. EasyJet is expected to fly 800,000 passengers from the seaside hub this year and, with existing Aer Lingus flights and a boost from the Olympics, traffic could top 1m. John Lawson, an analyst at Investec, thinks Stobart may even hit its 2m target in 2015, five years early. Meanwhile, biomass is gaining traction and delivered a maiden profit of £1.2m, while Stobart’s estates business has been profitable, too. Winning new contracts and passing diesel costs on to customers benefited revenue from transport and distribution, but not operating margins and profits there fell a fifth to £27.4m. Still, returns improved during the second half and market share gains look likely given many smaller firms are struggling. A new IT system and closure of two sites will also save money.

Investec expects adjusted pre-tax profit of £48m for 2013, giving adjusted EPS of 11p (2012: £35.2m/8.6p).

STOBART (STOB)

ORD PRICE:124pMARKET VALUE:£433m
TOUCH:123-124p12-MONTH HIGH:150pLOW: 110p   
DIVIDEND YIELD:4.8%PE RATIO:14
NET ASSET VALUE: 135p*NET DEBT:35%

Year to 29 FebTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
2008**1093.522.328.00
200943123.99.816.00
201044833.311.76.00
201150029.59.036.00
201255230.58.986.00
% change+10+3-1-

Ex-div: 23 May

Payment: 6 Jul

*Includes intangible assets of £281.5m, or 81p per share

**14 months