Financial Trading Blog
Stock of the day 13/05/2016 – Royal Mail PLC
After a rather rocky end to 2015 Royal Mail managed to navigate January’s jerky trading to hit a near month high of £4.60 by the start of February, largely thanks to a solid post-Christmas trading statement. That update saw Royal Mail reveal group revenue rose 1% for the 9 months to the end of 2015, whilst parcel volumes jumped 4% over Christmas and 6% in December as a whole when compared to 2014.
(Source: IT-Finance.com 13/05/2016)
For all its self-fuelled growth at the start of the year Royal Mail couldn’t help but come unstuck in the torrid trading that plagued the first half of February, the stock plunging to a 13th month low of £4.13 as the global markets went haywire. Yet the company did manage a swift recovery, and by the beginning of March it was back to £4.60.
Since then the stock has seen a fairly uninterrupted rise. By April Royal Mail was trading at £4.80, whilst a burst of energy at the start of May saw the company cross the £5 mark for the first time since last year July. From that peak the stock has fallen slightly, though not by much, Royal Mail sitting at a current trading price of £4.92 (IT-Finance.com, 13/05/2016).
In terms of the company’s full year figures analysts are expecting a 10% drop in underlying earnings to £387 million, something that may be compensated for with a 0.72p increase in its dividend to 21.72p. Investors will also be keen to see the latest developments in the internal war between parcel and letter volumes, the former having to compensate for the latter’s increasing decline.
Royal Mail PLC has a consensus rating of ‘Hold’ with an average target price of £5.09.
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