After losing the high-profile Thameslink contract to rival Go-Ahead (GOG) in May, Stagecoach (SGC) won back investors’ confidence this month with an extension to the West Coast franchise, which it runs through a joint venture with Sir Richard Branson's Virgin Group. A strong set of annual results should also help the company leave behind the Thameslink affair, which finance director Ross Paterson admits was a "disappointing loss" for the rail division.
Besides the West Coast franchise, Stagecoach has also received a two-year extension of the South West Trains contract, which will now expire in 2019, while negotiations continue over a similar deal for East Midlands Trains, whose franchise is currently due to expire in October next year. Stagecoach also confirmed it was one of three bidders shortlisted to run the upcoming Docklands Light Railway and East Coast franchises.
Another boon for Stagecoach is its robust performance in North America. Rivals such as FirstGroup (FGP) are struggling with underperforming assets across the Atlantic, but Stagecoach’s growing inter-city coach network contributed to an 80 per cent increase in North American operating profit to $38m (£22m).
Brokerage Investec expects pre-tax profits of £188m for the current financial year, giving EPS of 26p.
STAGECOACH (SGC) | ||||
|---|---|---|---|---|
| ORD PRICE: | 377p | MARKET VALUE: | £ 2.17bn | |
| TOUCH: | 375-381p | 12-MONTH HIGH: | 401p | LOW: 299p |
| DIVIDEND YIELD: | 2.5% | PE RATIO: | 16 | |
| NET ASSET VALUE: | 14p* | NET DEBT: | £462m | |
| Year to 30 April | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2010 | 2.16 | 126 | 15.1 | 6.5 |
| 2011 | 2.39 | 191 | 22.0 | 7.1 |
| 2012 | 2.59 | 240 | 29.5 | 7.8 |
| 2013 | 2.80 | 154 | 22.0 | 8.6 |
| 2014 | 2.93 | 158 | 23.1 | 9.5 |
| % change | +5 | +3 | +5 | +10 |
Ex-div: 27 Aug Payment: 01 Oct *Includes intangible assets of £148m or 26p per share | ||||
