According to today’s press release on the matter, the boards of Deutsche Post and UK Mail have reached an agreement on the terms of a recommended cash offer of 440p per share in cash for the entire issued share capital of UK Mail.  The offer values the equity of the firm at approximately £242.7m. 

As well as the cash purchase price UK Mail shareholders will be entitled to receive a 5.5p per share interim dividend. 

Disappointing deal 

Even though Deutsche’s offer represents a premium of approximately 43.1% to the closing share price on 27 September, today’s offer will be a disappointment to long-term shareholders. A little more than a year ago shares in UK Mail were trading at around 540p per share, a full 100p above the offered price. What’s more, at the beginning of 2014 the shares at 690p, 57% above Deutsche’s offer. 

Nonetheless, it looks as if the merger will go ahead. UK Mail’s management is recommending the offer to shareholders and barring any competition concerns or blocking votes from large shareholders, Deutsche Post has a clear runway. 

Competition concerns? 

Deutsche Post owns the well-known DHL brand, which is already active in the UK. Regulators may have some issues here. By taking over UK Mail, Deutsche will remove one of its competitors in the already highly concentrated UK delivery market. After the merger, Royal Mail will be the enlarged group’s only sizeable competitor, a development that could be a red flag for competition authorities. 

Bailout 

The past 12 months have been rocky for UK Mail. Last year the group made the headlines for all the wrong reasons when it developed a problem handling parcels of a certain size at its new £20m sorting facility near Coventry. As a result, in the first half, its pre-tax profit fell 82%, and chief executive Guy Buswell was forced to step down in November. Pre-tax profit fell 28% overall for the group’s last full financial year to 31 March. 

UK Mail claims that the issues at its sorting hub are now behind it but that hasn’t stopped the market turning its back on the company. Ahead of today’s bid, the shares had lost 18% excluding dividends over the past 12 months. Still, after last year’s troubles City analysts are expecting the company’s earnings per share to jump by 41% for the year ending 31 March 2017. 

The bottom line 

Overall, today’s offer for UK Mail is relatively good news for shareholders. However, for long-term shareholders, it’s rather underwhelming. But barring any competition concerns it looks as if the deal will go ahead and a higher offer is unlikely to emerge. 

The post What does today’s offer mean for UK Mail Group plc shareholders? appeared first on The Twelfth Magpie.

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Rupert Hargreaves 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.

The group has a new chief executive and appears to have put last year’s profit warnings behind it. May’s final results didn’t flag up any new problems and profits were as expected. The firm’s latest trading statement suggests performance so far this year is in line with expectations.

Improving outlook

UK Mail’s new chief executive, Peter Fuller, previously spent 19 years at Parcelforce. The Royal Mail parcel business is currently delivering double-digit percentage growth, so Mr Fuller’s credentials look strong.

Analysts expect UK Mail’s profits to continue their recovery this year. The balance sheet is strong and adjusted earnings per share are expected to rise by 20% in both the current year and next year.

This puts UK Mail shares on a 2016/17 forecast P/E of 13.5, falling to 11.5 in 2017/18. There’s also an attractive forecast dividend yield of 5.8%.

This modest forecast valuation gives UK Mail a P/E growth — or PEG ratio — of just 0.7. A PEG ratio of less than one suggests that the current share price may not reflect the full value of expected earnings growth.

At about 300p, I’d rate UK Mail as a buy.

Taking a longer view

The global shipping industry is currently suffering from a combination of low rates and having too many ships. Braemar Shipping Services (LSE: BMS) also has exposure to the oil sector, where the market for offshore services is understandably poor.

However, the group has a long and successful record in the shipping business. It operates a mix of technical, broking and logistics services that add diversity to the firm’s revenue and profit. Braemar is also a people business, so it’s not burdened with high levels of debt and ships that may be falling in value.

Like UK Mail, Braemar has a strong balance sheet. The group had net cash of £9.2m at the end of February and almost no debt. A key element of the stock’s appeal is its high dividend yield, which currently stands at 6.4%.

An income champion?

The dividend yield is attractive, but it’s worth remembering that Braemar’s dividend of 26p per share has been unchanged since 2010. The payout is only expected to be covered 1.3 times by earnings this year, so an increase is very unlikely.

Indeed, I’d say Braemar’s dividend is pretty much the maximum the group can afford. But there are signs that trading is improving. Braemar’s operating margin recovered from a low of 3.7% to 6.5% last year.

Earnings per share are expected to rise by about 5% to 33.2p this year, with a similar increase pencilled-in for the following year.

Braemar shares are probably priced about right on a short-term view. However, it has been trading since 1982 and is a quality business, in my opinion. I’m fairly confident that buying now should deliver decent long-term gains.

The post Are these small cap bargains too cheap to ignore? appeared first on The Twelfth Magpie.

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Roland Head owns shares of Royal Mail. 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.

At first glance, it looks as if Countrywide is a company in turmoil. Three of the company’s top executives walked out this month, the latest in a long line of departures as a result of the dramatic reshaping of the group under chief executive Alison Platt. All three senior management figures walked out to pursue “other opportunities”, which was the same excuse given earlier in the year when the managing director of estate agency group, Bob Scarff, and the group commercial director, Nick Dunning, both stepped aside at short notice. It looks as if these departures are part of the group’s drastic restructuring. However, while management is busy reorganising the business, Countrywide’s profits are falling. Earlier this month Countrywide revealed operating profits for the first nine months of the year were down 11% year-on-year.  City analysts expect full-year earnings per share to fall 13% year-on-year so for the time being it might be wise to avoid the company. 

Thomas Cook fell to a 52-week low on concerns that geopolitics would weigh on the company’s earnings for the next few years. But the company dispelled these concerns this week by reporting full-year results that beat expectations. Net profit nearly doubled in the year to the end of September and based on these figures the company currently trades at a P/E of 9.1. After an impressive 2015, Thomas Cook could have more in the tank for 2016. 

Stagnant sales and concerning levels of management compensation have weighed on Vislink’s share price this year. Vislink’s shares are down by nearly 50% from their June peak and they now trade at a forward P/E of 7.5. City analysts expect the company to report earnings growth of 18% for 2015, implying that the group is trading at a 2016 P/E of 6.9. As With such a low valuation, Vislink’s shares could be worth a bet. 

Daily Mail and General Trust has been hurt by lower-than-expected visitor numbers to the company’s MailOnline newspaper. Group pre-tax profit fell 4%for the year ended 30 September 2015, but City analysts expect the company to return to growth next year. Earnings per share growth of 4% in pencilled in for next year. Daily Mail and General trades at a forward P/E of 11.8, which isn’t overly expensive and the shares support a yield of 3.2%. Still, if the company disappoints again, the shares could print a new 52-week low. 

City analysts expect UK Mail’s earnings per share to slump 50% to 15p for the year ending 31/03/2016 and based on this forecast the company is trading at a forward P/E of 21.6, a premium growth multiple the company doesn’t deserve. What’s more, UK Mail’s shares may support a dividend yield of 7.2% by the payout isn’t covered by earnings per share. Overall, UK Mail might be one company to avoid.

The post Should You Buy These Stocks Near 52-Week Lows? Countrywide PLC, Thomas Cook Group plc, Vislink plc, Daily Mail and General Trust plc & UK Mail Group PLC appeared first on The Twelfth Magpie.

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• Why Barclays shares could have a huge second half of 2026
• Back below 500p, is it time to consider BP shares again?
• Is there any value left in Lloyds shares now they’re over £1?
• How much would I need in a Stocks and Shares ISA to target £19,036 a year in second income?
• After huge new nuclear deals, are Rolls-Royce’s sub-£15 shares set to power higher?

Rupert Hargreaves 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.