Financial Trading Blog

Stock of the day 01/09/2015 – Redde PLC



It’s been a stellar 2015 so far for support services group Redde (formerly Helphire), which specialises in ‘accident management support, legal services, fleet management and policy fulfilment services’.


With the stock just reaching its best price since its nightmare 2008, can it maintain this form following its full year results on Thursday?

The company opened the year at £0.93, already a 6 year high, following a trading update in December that saw Redde describe its 6 months to the end of 2014 as ‘materially ahead’ of what its own forecasts had been, going on to say that its figures were ‘significantly ahead’ of where the company had been a 12 months before.

Redde PLC Chart September 2015
(Source: IT-Finance.com 01/09/2015)

However, whilst the company remained achingly close to the pound mark, even reaching £0.99 in the first week of January, it wasn’t to be until the end of February that Redde could cross that threshold for the first time since 2009. The reason? Well, Redde came good on the promises made in December, posting a 32% increase in turnover to £122 million for the 6 months to December 31st 2014, with a 166% jump in adjusted operating profit to £11.2 million and a 39.7% leap in adjusted earnings per share to 4.3p. This caused the stock to surge 20% in the two days following the announcement, sending Redde to a high of £1.17.

Since then Redde hasn’t dipped below £1, and whilst it initially fell away from that post-results high, a positive update at the end of April stating that its trading was ‘exceeding expectations’ followed by an end of June update that stated that the company’s full year results are likely to ‘exceed the upper end of market expectations’ saw Redde enter July at £1.37.

Redde then spent most of July and the start of August above the £1.40 mark, before a big piece of news sent the stock to its current highs. The company announced on August 20th it was buying accident management firm FMG for £43.2 million, pushing the stock to a 2015 (and near 7-year) peak of £1.63 at the end of last week as investors were impressed by its expanding intentions.

In terms of its full year results, analysts at N+1 are expecting a 5% increase in pre-tax profit year-on-year to £21.9 million. Redde is at a current trading price of £1.57 (IT-Finance.com, 01/09/2015).


 

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