Director dealings are essentially insider transactions for shares between directors and the companies they work for. These dealings are always made public, and are often considered a good indicator of a company’s future prospects. However, they don’t get nearly as much attention as other company news due to their complex nature. Nonetheless, here I’m breaking down this week’s biggest director dealings from three FTSE firms.

Vodafone

Vodafone (LSE:VOD) is a British multinational telecommunications company. It predominantly operates services in Asia, Africa, Europe, and Oceania. The company runs at least some form of operations in over 150 countries.

Following lacklustre numbers from its Q1 trading update, the share price dropped by 5%. It has stayed there since. Despite that though, it’s a sign of confidence when a high-ranking director purchases shares. And this week, Vodafone’s Chairman decided to reinvest his dividends into buying more Vodafone shares.

• Name: Jean-François van Boxmeer
• Position of director: Chairman
• Nature of transaction: Dividend shares
• Date of transaction: 10 August 2022
• Amount bought: 9,975 @ £1.21
• Total value: £12,069.75

Deliveroo

Deliveroo (LSE: ROO) is a British online food delivery company. It operates in over 200 locations across the UK, and is the second-biggest food delivery platform in the country. It also operates internationally with operations in France, Singapore, Australia, and many more.

In this week’s transaction, a director exercised his option to redeem stock compensation. Following this, he opted to sell approximately half of the shares received to cover tax liabilities. That being said, it’s worth noting that this is a monthly occurrence from the company’s CFO. As such, these actions shouldn’t impact investor sentiment surrounding the stock. It’s worth pointing out, however, that the sale of these shares dilute shareholders’ value. This is because there are now more Deliveroo shares floating on the market.

• Name: Adam Miller
• Position of director: Chief Financial Officer
• Nature of transaction: Award shares
• Date of transaction: 15 August 2022
• Amount vested: 83,400 @ £0.96
• Total value: £80,247.48

• Name: Adam Miller
• Position of director: Chief Financial Officer
• Nature of transaction: Sales of shares to cover tax liabilities
• Date of transaction: 15 August 2022
• Amount sold: 40,402 @ £0.95
• Total value: £38,381.90

FirstGroup

FirstGroup (LSE: FGP) is a British multi-national transport group. The FTSE 250 firm is the leading transport operator in the UK and North America. It is widely known for being a provider of public transport, especially buses in the UK.

Rather surprisingly, its shares have managed to outperform the wider UK market index this year. But after the share price took an 11% hit last week, a couple of large director dealings were carried out. The first involves a non-executive director purchasing a substantial number of shares. But what really caught my eye were the conditional share awards that could be awarded to FirstGroup’s CEO and CFO. This should shore up investors’ confidence in the stock, as the group’s management will have to perform and meet investors’ expectations in order for these award shares to vest.

• Name: Sally Cabrini
• Position of director: Non-Executive Director
• Nature of transaction: Purchase of shares
• Date of transaction: 17 August 2022
• Amount vested: 10,000 @ £1.15
• Total value: £11,482

• Name: Graham Sutherland
• Position of director: Chief Executive Officer
• Nature of transaction: Award shares
• Date of transaction: 18 August 2022
• Amount vested: 972,590 @ Nil
• Total value: N/A

• Name: Ryan Mangold
• Position of director: Chief Financial Officer
• Nature of transaction: Award shares
• Date of transaction: 18 August 2022
• Amount vested: 1,003,226 @ Nil
• Total value: N/A

Types of Shares

To provide context, there are a few types of shares that can be purchased by directors. Some directors opt to purchase shares via the open market. Having said that, directors also have the option to purchase and receive shares via a share incentive plan (SIP).

A SIP is an employee plan for companies within the UK to flexibly award shares to employees. Publicly listed companies normally exercise this option because it’s tax-efficient for both the employer and its employees.

In this week’s set of director dealings, a few types of SIPs were exercised. For starters, Vodafone’s Chairman opted to purchase more Vodafone shares from the dividends he received from his current shares.

On the other hand, Deliveroo’s CFO decided to exercise the option of redeeming his restricted stock units. These are a form of award shares which allow for directors to redeem shares at a later date, as either as part of their salary or based on meeting performance obligations.

FirstGroup’s CEO and CFO were awarded shares as well, but these will only be vested once performance targets are met. In this case, more than 1.5m shares are up for grabs between the two directors under the operator’s long-term incentive plan (LTIP). The LTIP award will normally vest on the third anniversary of the date of award, subject to satisfaction of performance conditions and continued employment. The award is also subject to an additional holding period of two years from the date on which the award vests.

The post Director dealings: Vodafone, Deliveroo, FirstGroup appeared first on The Twelfth Magpie.

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John Choong has no position in any of the shares mentioned. The Motley Fool UK has recommended Deliveroo Holdings Plc and Vodafone. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

The stock has already begun recovering. Over the last 12 months, it’s up by nearly 45%. So, is now the time to add it to my portfolio?

The rising National Express share price

Before the pandemic hit, the National Express share price had increased each year for seven years in a row. This was primarily thanks to its ability to secure new contracts, resulting in a continually growing revenue stream.

In fact, in 2019, the company reported new record levels in both sales and profits, which reached £2.74bn and £187m respectively. By comparison, these figures were around £1.75bn and £123m five years prior. Its growth has been consistent and impressive, as has its rising dividend yield.

The pandemic swiftly put an end to this upward trajectory. And by the end of 2020, revenue fell by 28.7%, while underlying profits dipped into the red with a reported operating loss of £381.4m. Obviously, this isn’t good news. So why is the share price going up?

Even though the full-year performance was poor, most of this impact occurred in the first half of 2020. The rest of the year actually saw a return to growth rates similar to historical levels. How? Because the company successfully signed a collection of new contracts with a gross value of £900m. Simultaneously, free cash flow became positive again, reducing the firm’s reliance on debt financing, so much so that the management team was able to pay off £400m worth of loans.

Overall it looks like the pandemic hasn’t caused any severe permanent damage to the business, and so the National Express share price is back on the rise.

The road ahead

While the latest quarterly figures show several signs of recovery, there are still plenty of challenges that lie ahead. The company still has not returned to full operating capacity. And I think it may be some time before it does, due to the social distancing requirements transport operators have to comply with.

To demonstrate the extent of this problem, the Financial Times reported that over 76 passenger vehicle companies in the UK have gone bankrupt because of the disruptions the sector continues to face today. Needless to say, should travel restrictions be extended due to rising infection rates, it could have a negative impact on the National Express share price.

The bottom line

Overall, it seems to me that this business has managed to navigate the uncertain Covid-19 environment relatively well. Its balance sheet looks pretty healthy, in my opinion. And seeing positive free cash flow is quite encouraging.

Assuming that passenger volumes don’t start falling again, I think the National Express share price can make a full recovery by the end of 2021. And with it, the return of its historical 4% dividend yield. Therefore I would consider adding this stock to my portfolio.

The post Will the National Express share price recover in 2021? appeared first on The Twelfth Magpie.

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Zaven Boyrazian does not own shares in National Express. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

However, despite the generally expensive market, there are still some attractive low P/E stocks available if you’re willing to look hard enough. And one FTSE 100 stock out there which seems to fit the bill is housebuilder Taylor Wimpey (LSE: TW).

Rout in property stocks

Like many other housebuilders, shares in Taylor Wimpey were hard hit by this week’s rout in property-related stocks. Business has boomed for the housebuilders, but there’s growing concern that we’re approaching the cyclical top of the property market.

An update from Taylor Wimpey on Wednesday did little to calm investor nerves, as although the group continued to report an increase in housing completions and a rise in average selling prices, its order book fell from £1,682m in 2016 to £1,629m in 2017. This fall was seen by some analysts as an early warning sign that market conditions have turned.

However, the company disagreed and reassured investors that buyer demand remained strong. It also said the dip in its forward order book was instead due to the timings of its developments.

Fundamentals intact

Looking ahead, I reckon there’s still room for further growth as the long-term fundamentals remain firmly intact. Notwithstanding political and economic uncertainty, the chronic shortage of affordable housing supply means many more new homes will need to be built to meet demand. The government recognises this and has proposed changes to planning laws, which could support future volume growth for housebuilders.

Moreover, valuations are undemanding, with the company well placed to grow medium-term earnings as it ramps up the pace of new constructions. City analysts are predicting underlying earnings growth to accelerate to 10% this year, up from forecast growth of 7% for 2017, which indicates the stock trades at just 10 times its expected earnings this year.

Turnaround play

Another value stock to watch out for is public transport operator Stagecoach (LSE: SGC).

Its outlook has improved somewhat since my last look at the company, with recent management action delivering positive progress for its UK bus networks and the company set to secure a positive outcome from the negotiation of new terms for its East Coast rail franchise.

Profits have so far held up better than expected, with adjusted earnings per share down just 2% to 13.6p in the six months to 28 October. Still, there’s plenty of room for further improvement. Independent research shows the firm continues to offer lower than average bus fares than the industry, which underscores its greater opportunity to raise fares in comparison to its rivals.

Possible re-rating

As such, I believe there’s scope for a positive earnings surprise from upcoming earnings announcements this year. A re-rating of the stock is also possible if this happens, with the stock currently heavily discounted on its recent woes.

With this in mind, I reckon more of the risk is on the upside for Stagecoach. The stock currently trades at a mere 8.4 times its expected earnings this year, and offers a prospective dividend yield of 7.2%.

The post My top 2 value stocks for 2018 appeared first on The Twelfth Magpie.

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Jack Tang has a position in Taylor Wimpey plc. The Motley Fool UK has recommended Stagecoach. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

First falling

First Group was the biggest faller in the FTSE250 this morning, its shares losing 5.5% after a cloudy outlook overshadowed a 23% increase in profit last year.

The group, which carries around 2.2bn passengers a year, owns the world-famous Greyhound buses, the only national operator of scheduled intercity coach transportation services in the US and Canada.

The company also operates bus and train routes in the UK, commanding a fifth of the market outside London under the First Bus brand and operating the Great Western Railway, TransPennine Express and Hull Trains railway franchises.

The company has struggled to turn operations around for years now, but even a near-doubling of capital expenditure over the past few years has not done the trick. Profits still languish well below 2010 levels, so the market’s reaction to yet more slow progress is unsurprising.

Cash generated from operations hit a five-year high at £520.4m, with strong free cashflow and the lack of dividend payment allowing the company to strengthen the balance sheet, with net debt reducing from £1,521m to £1,389m.

There’s certainly progress on view, but an investment in First Group could be risky. The company has a marred track record, an unclear outlook, significant debt and pays no dividend. Counterintuitively, the low oil price is bad for bus and rail operators, because while it reduces the utility bill, it also makes motoring a more attractive proposition to commuters, thus denting passenger numbers. 

Furthermore, the attractive features of travel businesses, including those monopolies on certain routes and that predictable, repeat business, are undermined by the regular bidding wars held over certain franchises. Driverless cars could throw another spanner in the works, because I honestly have no idea how this will impact the industry over the coming years.

Given the long-term uncertainty and lack of exciting growth prospects, I feel the business does not warrant an investment at a PE of 16.5.

Stand and deliver?

Like First Group, UK number two travel group Stagecoach (LSE: ) has struggled over the last couple of years as low petrol costs have made the car a more affordable option again. Unlike First Group however, Stagecoach does deliver. It pays investors 5.7%, covered by free cashflow, to keep investors warm while they wait for capital appreciation. What’s more, the company’s valuation is lower than its rival, at a PE of 12.3.

While First Group’s sales are split fairly evenly between here and the US, Stagecoach derives the majority of revenues from the UK. Despite future potential like the lossmaking MegaBus Europe division possibly set to move towards profitability in years to come after the disposal of the division’s retail arm, it has many of the same potential problems that affect its industry peer.

I’m not madly keen on either business right now. It’s true that over time, the UK’s population looks likely to rise steadily and be a beneficial, if gradual, trend for transport companies. But I don’t trust the stability of the franchised model enough to invest now. If I had to choose, Stagecoach’s superior dividend, balance sheet and track record seem to represent the more attractive option, although I’d prefer to fish in very different waters. 

The post Investors, beware: the wheels might come off this sector appeared first on The Twelfth Magpie.

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Zach Coffell has no position in any shares mentioned. The Motley Fool UK has recommended Stagecoach. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

As a result of these issues, FirstGroup now expects operating profit in the current financial year to be below previous guidance. But it remains confident that its transformation plans will improve the company’s long-term performance and drive sustainable cash generation moving forward.

With FirstGroup trading on a forward price-to-earnings (P/E) ratio of 8 and being forecast to increase dividends by 4.8 times next year, its shares appear to offer excellent value for money. While further problems could lie ahead, for long-term investors it could prove to be an excellent buy.

Mixed picture

Also reporting today was Flybe (LSE: FLYB), with the short-haul airline operator releasing a rather mixed third quarter update. On the one hand, it has been able to increase seat capacity by 10.1% versus the third quarter of the previous year and recorded a rise in passenger volumes and passenger revenues of 2.1% and 3.6%, respectively, this time. Furthermore, Flybe also reduced cost per seat by 4.7% (including fuel) and this should improve its margins moving forward.

However, with demand for air travel coming under pressure following the terrorist incidents during the period, Flybe’s load factor fell from 74.3% in the third quarter of the previous year to 68.9% this year. Passenger revenue on a per seat basis also fell by 6.1% and while progress is being made on Flybe’s business offering, its performance during the quarter was still rather mixed. As such, its shares are down by over 3% today.

Looking ahead, Flybe is expected to return to profitability in the current financial year and with its shares having a forward P/E ratio of 8, they seem to be an attractive purchase at the present time.

Looking good

Meanwhile, global aviation services group Air Partner (LSE: AIR) today increased its guidance for the full year. Its release stated that trading momentum in the second half of the year remained encouraging with a stronger-than-anticipated end to the period. Therefore, it expects underlying pre-tax profit to be not less than £4.2m for financial year 2016, which compares favourably to the £2.6m recorded in financial year 2015.

Looking ahead, Air Partner seems to be well-positioned to deliver further growth. It has successfully implemented its Customer First initiative and the acquisitions of Cabot Aviation and Baines Simmons also provide it with a more impressive long-term growth profile. With Air Partner trading on a price-to-earnings growth (PEG) ratio of just 0.3, it appears to offer strong growth at a very reasonable price.

The post Today’s Transport Winners And Losers: Flybe Group PLC, FirstGroup plc And Air Partner plc appeared first on The Twelfth Magpie.

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Peter Stephens has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Margin improvements more than offsets lower revenues

Revenues did fall significantly though, down 9.9% to £6.05 million, as the subsidy for the ScotRail franchise was reduced. But this did not affect operating profits, as the reduction in the subsidy was matched by a reduction in track access charges.

Demand for Greyhound did fall though, because lower fuel prices. Nevertheless, strong margin improvement, particularly with its US school bus service and like-for-like volume and revenue growth, had more than offset the impact of lower revenues.

Loss of rail franchises

The strong full year results suggest that FirstGroup’s is well on the way to its recovery. Looking forward, the failure to renew its ScotRail and Capital Connect rail franchises will mean its UK rail operations will continue to act as a drag on its earnings and put pressure on cash flows.

In the longer term, a more discipline approach to bidding for new contracts and further efficiency savings will lead to further improvement in operating margins. The results are already visible with the turnaround of itts US school bus business, which has so far completed negotiations for just over half of its contracts.

Discount to peers

Shares in FirstGroup have rallied by 20% since the start of the year, but it continues to trade at a discount to its peers on a forward earnings basis. FirstGroup trades at a forward P/E of 11.9, based on expectations of adjusted EPS of 9.6 pence. But, upward revisions in analysts expectations are likely, following the progress made with price increases and faster than expected passenger numbers.

Stagecoach (LSE: SGC) and National Express (LSE: NEX), two of its larger peers, trade at forward P/Es of 13.6 and 13.9, respectively. Their prospective dividend yields are 2.6% and 3.4%, respectively. Although FirstGroup had cancelled its dividends since 2013; it could resume dividend payments soon as its cash flow situation is likely to improve after its two rail franchises expire.

Stagecoach

Unlike FirstGroup, Stagecoach is doing much better with its rail franchises and doing relatively poorly with its bus business. Having won the East Coast Mainline franchise at the end of 2014, rail revenues are set to climb to over 50% of the group’s revenues. Margins for UK bus routes have recently been declining though, because of higher staff and pension costs and a price war with Manchester bus services.

The long term outlook for Stagecoach remains attractive, because increased traffic congestion will likely increase demand for bus travel, even if fuel prices remain low. But, margin compression in the medium term is likely to hurt earnings growth.

National Express

National Express is most attractive on free cash flow generation, with its shares carrying a free cash flow yield of 11.8%. With such strong cash flow generation, the company has so far been rapidly reducing its indebtedness. But, with its net debt to EBITDA, a measure of indebtedness, soon falling to its lower bound target of 2.0x, we could expect more rapid dividend growth within the next few years.

National Express seems to be more attractive than Stagecoach, but FirstGroup appears to have greater upside potential than the two, because of the likelihood of further margin gains and its less expensive valuation.

The post Does FirstGroup plc’s Earnings Beat Make It A Better Buy Than Stagecoach Group plc or National Express Group plc? appeared first on The Twelfth Magpie.

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Jack Tang has no position in any shares mentioned. The Motley Fool UK has recommended Stagecoach. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

The group’s regional bus operations saw increased contract revenue, but commercial and concessionary passenger numbers remained broadly flat year-on-year, with business affected by continuing weakness in the economy of the north east.

In London, Go-Ahead says that its bus revenue is still being affected by the reallocation of bus service operators grant, and that full year mileage growth is expected to be broadly flat.

In rail, the company says that business in its Southern franchise remains in line with expectations and that revenue performance in its London Midland franchise has improved, thanks to reduced network disruption. Go-Ahead also says that its new Govia Thameslink franchise is performing “broadly in line” with assumptions made in the bid.

Overall, Go-Ahead says that it’s in a good financial position, with strong cash generation, and that its expectations for the full year remain unchanged.

Meanwhile, Stagecoach Group (LSE: SGC), which operates a mix of public transport services in the UK, US and Canada, is recovering from a share price fall of as much as 10% yesterday, after it reported flat profits in its interim results for the six months to 31 October. But at 384p, Stagecoach’s share price is still 5.6% below its Tuesday close.

The company — which last week was awarded the East Coast Mainline franchise in partnership with Virgin Group — warned that full-year operating profit from it regional UK Bus and North America businesses will be lower than previously expected.

But it went on to say that it should be “broadly offset” by profit growth in other areas, and that it therefore expects to achieve its full-year adjusted earnings per share target.

Go-Ahead Group’s share price is now up 55% on this time last year, trouncing both Stagecoach, whose price is up just 2.8%, and the FTSE All-Share, which is down 2.2%.

The post What’s Driving Go-Ahead Group plc And Stagecoach Group plc Down? appeared first on The Twelfth Magpie.

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• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?
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Jon Wallis has no position in any shares mentioned. The Motley Fool UK has recommended Stagecoach. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.