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National Express on board with new US tax laws

Bus operator sees ‘small’ benefit in 2017, lower overall rate for 2018 and beyond

National Express bus en route
US tax changes won't slow National Express

National Express PLC (LON:NEX) said Tuesday that it expects a more favourable tax rate in the US with the recent passage of the US Tax Cuts and Jobs Act.

The public transport operator anticipates its effective tax rate in 2018 to fall to the low 20% range from the high 20% range.

READ: National Express buys two bus operations in the US and Spain as it reports strong trading

For the year ended December 31, the company said it will see a “small tax credit” due to the revaluation of deferred tax balances, which will be reflected when 2017’s full-year results are announced on March 1.

The group in December bought a US-based school bus and coach business that operates out of Cincinnati, Ohio.

Analyst reaction

In a research note, Liberum raised its estimated 2018 and 2019 earnings per share forecasts by 3%, but analysts noted that they are “mindful of the potential translation risk if the US dollar continues to depreciate.”

Liberum has a “buy” rating and target price of 390p on the shares, which were trading in a narrow range at around 381p Monday morning.

-- Adds analyst reaction, updates share price --

Quick facts: National Express

Price: 216.8 GBX

Market: LSE
Market Cap: £1.33 billion

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