According to
First Group (2012) its market capitalization of USD 1.51 bn. ranks it among
mid-cap stocks. During the last 3 years First Group plc stock has reached the
highest share price of 438 GBp (28/09/11) and a lowest share price of 190.0 GBp
(23/04/12).
According to
Financial Times (2012) the poor performance of the company in their share
prices in April was considered by the sale of 130 - vehicle bus depot in
northeast London to their competitor Go-Ahead Group for a £14m deal. This
selling was in order to reduce First group debt. In addition, the economic
crisis hitting the UK, especially in transportation has made the
share price falls. First Group Company current share price of 218.8 GBp
(25/05/12), places it 47.0% under its 52 week high and near its bottom
(bi-weekly closing), cited by First Group (2012). The price development is
generally in the volatility channel whose upper and lower limits are presented
here. Crossing one of these limits is an exceptional situation accompanied by
strong increases in short-term volatility, Cited by Financial Times (2012).
First Group
Company has been active in the Travel & Tourism industry since twenty years
ago, and therefore belongs to the Travel & Leisure industry group, cited by
Financial Times (2012). In order to evaluate whether First Group Company is at
this time reasonably priced, this could be compared with the projected earnings
growth and its dividend with the estimated PE ratio, this information was taken
from Financial Times markets data (2012). Based on this,
- The company is basically undervalued compared to its fair price.
- The company valuation is less attractive than the Travel & Leisure sector.
Currently,
the share price probably for First Group Company is quite good, even if other companies
stocks in the travel and leisure business group show a higher valuation, for
example Go-Ahead despite of being below the FTS 100 index since January 2012,
currently has progressed its share price in +1.28, cited by LSE (2012).
According
to the Financial Times (2012) the projected earnings growth to the estimated PE
ratio of the First Group company is quite high (2.24), which means that First
Group company past earnings experienced a strong decline before shooting upward
again, cited by Financial Times (2012). First Group Company positioning against
its Travel & Leisure sector accentuates that the evidently negative trend
of its earnings revisions is a particular problem to the stock, because its
environment is -on the contrary- being positively revised, cited by The
Screener (2012).
The medium-term
technical trend for First Group Company has been negative since 13/01/2012 at a
share price of 317.9 GBp. According to Financial Times (2012) First Group adjusted
technical reverse point is 233.96 GBp, or 16.9% above the current price. This
year for Fist Group has shown a relative performance against the reference
index FTSE 100. The negative performance of the
company confirms that the investors are more interested in other stocks.
BIBLIOGRAPHY
WEBSITES
- First Group (2012) “ First Group Latest News” [online] Available at: http://www.firstgroup.com/corporate/latest_news/ (Accessed 18/05/2012).
- Financial Times (2012) "First Group PLC" [online] Available at: http://markets.ft.com/Research/Markets/Tearsheets/News-and-comment?s=FGP:LSE (Accessed 19/05/2012).
- LSE (2012) “ Go a Head Group plc” [online] Available at: http://www.londonstockexchange.com/exchange/prices-and-markets/stocks/summary/company-summary.html?fourWayKey=GB0003753778GBGBXSTMM (Accessed 18/05/2012).
- The Screener (2012) “ First Group PLC ” Financial Report 1, pp 1-4.
No comments:
Post a Comment