Bus and trains operator Stagecoach warned back in late September that it was becoming increasingly harder to predict the outcome of the full year.
It maintained earnings guidance for the year but noted that independent macro-economic forecasts cover a wide range of possible outcomes.
The first sixteen weeks of the current financial year, which runs to the end of April 2017, saw the group’s regional bus revenues fall by 1.9% year-on-year, while in London the decline was a bit more pedestrian at 0.9%.
The North America operation saw revenue in the four months to the end of August dive 3.3% higher compared to a year earlier.
UK Rail operations grew revenues by 1.7% while the Virgin Rail business saw revenues improve by 4.7% from a year earlier.
The East Coast rail franchise is the main concern, according to Liberum Capital Markets, which recently trimmed its target price for the stock from 225p to 215p.
“Stagecoach is experiencing weak trading across its entire business. UK Regional Bus is seeing falling volumes and revenues, although lower fuel costs as past expensive hedges roll off and mileage cuts are mitigating the margin impact. London Bus is stagnating against tough comparatives, with performance bonuses from the QIC regime under pressure from congestion,” the broker said.
“UK Rail is seeing slower revenue growth, in line with industry trends,” it added.
At least the North American operations should get a lift from currency movements, but the Megabus operation remains under pressure from weak fuel prices, which have encouraged users to take alternative forms of transport.
“However, none of these issues are new. With Stagecoach trading on a single digit P/E and at a discount to the public transport operator peer group average, we believe the bad news is priced in,” the broker said, which advises those who have the shares to continue holding them.
Significant announcements expected
Interims: Kromek Group PLC (LON:KMK); Stagecoach Group PLC (LON:SGC); The Monks Investment Trust PLC (LON:MMKS)
Finals: Redhall Group PLC (LON:RHL); Private & Commercial Finance Group plc (LON:PCF)