Stock of the day 22/06/2015 – Stagecoach Group PLC

Is Stagecoach Group on a highway to hell, or a road to paradise, ahead of its full year 2014 earnings release on Wednesday?

Despite ending up fairly flat, 2014 saw plenty of drama for Stagecoach especially at the tail end of the year. After opening the year at £3.79, Stagecoach spent much of the following 11 months in a 10p trading bracket either side of this price. Things changed around October, with strong revenue growth and the announcement of a £20 million Megabus expansion in Europe helping the stock reach the £4 for the first since March ’14.


(Source: IT-Finance.com 22/06/2015)

These gains had fallen away by the end of November; however, the news that Stagecoach, alongside Richard Branson’s Virgin Group, had secured the contract East Coast rail franchise caused the stock to surge over 8%, pushing it to highs of £4.16 by the start of December. Yet things took a turn on December 10th, as Stagecoach told investors that its full year profits would be less than expected, due to cheaper fuel making driving more attractive, putting the stock on a declining path that saw it enter 2015 £3.66, 13p lower than 12 months previous.

This downward trend continued well into 2015, with Stagecoach hitting a 16-month low of £3.42 at the start of March. However things began to see a turnaround after this low and by the end of April it was back to the familiar price of £3.75. Stagecoach then saw a big swing towards those 2014 highs on May 8th, the day of the Tory election victory, with an intraday high of £4.36 being followed by a closing price of £3.98. Since then Stagecoach, unlike in December, has largely managed to hold onto this level, in no small part aided by the progress of its bid for the East Anglia rail franchise, which will be tendered in August, with the company on the shortlist alongside FirstGroup.

In terms of its full year results, analysts are expecting a 6.15% increase in revenue to £3.11 billion alongside a 3.3% fall in net adjusted income to £144 million. This has left Stagecoach with a consensus rating of ‘buy’ with an average target price of £4.13 on a current trading price of £4.08 (22/06/2015, IT-Finance.com).

Monday’s stock news:

It looks like Thorntons got a pretty sweet deal this morning, with a £1.45 per share takeover by Ferrero, of Rocher fame, lifting the chocolate to that offer price, and nearly 45% gains in the process. This is Thorntons’ highest level since April last year, and a far cry from the near 2 year lows the stock hit at the end of February.

Spire Healthcare jumped 8.5% this morning following the news that the group is to sell a near 30% stake to the South African company Mediclinic. The sale was priced at £3.60 per share, with Spire jumping accordingly to a current trading price of £3.48, recovering the 8% in losses the company has seen over the last 10 days.

There’s been a bit of excitement over Sky this Monday following a Telegraph article that claims the Murdoch family turned down offers from Vodafone and Vivendi for their stake in the ascendant company. This has seen the telecoms giant jump by nearly 4% to £10.78, below the intraday high of £10.98 it reached just after the bell.