FirstGroup PLC (LSE:FGP) shares were trading almost 15% higher on Thursday afternoon as consensus-beating results impressed investors and analysts.
Liberum Capital analyst Gerald Khoo said: “The results reflected a clear margin recovery in bus operations and surprising strength in its rail division.
“The success in Bus was supported by strong passenger volume growth (+20% YoY) as patronage continued to recover from the impact of the pandemic.”
The bus and train operator announced an additional share buyback of £115mln following the receipt of proceeds resulting from its North America exit while a final dividend of 2.9p meant a more than trebled total payout for the year of 3.8p, up from 1.1p.
“Net cash was also better than we had forecast, with the dividend also well ahead of our assumptions,” Khoo added.
Striking rail workers have plagued the industry over the last year, with the National Union of Rail, Maritime and Transport Workers (RMT) having taken 30 days of industrial action.
No more dates in June are set for strikes but both the RMT and the Associated Society of Locomotive Engineers and Firemen (ASLEF) could launch further walkouts as a deal is yet to be made.
Liberum analyst Khoo, who rates FirstGroup a ‘buy’, raised his pre-tax profit forecasts for the firm by 13% to £110.8mln for 2024 and hiked the share price target to 180p from 165p.