Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 66% of retail investor accounts lose money when spread betting and/or trading CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money.
Stock Watch

Is the Stagecoach share price on the road to recovery?

Stagecoach share price: a Stagecoach bus in Manchester

The Covid-19 pandemic has taken its toll across the travel industry, and while the focus has often fallen on airlines, both domestic rail and bus operators have also suffered. Stagecoach is no exception, with the Scottish bus giant taking a hit as the numerous lockdowns came into force.

The Stagecoach share price has seen a decent recovery recently. Will Wednesday’s full-year results provide another boost?

Stagecoach share price hoping for a boost

As Covid-19 swept across the globe, restrictions pushed people back into their cars, despite social distancing guidelines preventing from buses running at capacity. As restrictions are lifted, the company is still running at around 46% of its capacity.

The Stagecoach share price has seen some decent gains year-to-date in anticipation of a reopening in the third quarter of this year, hitting highs just over 100p, and currently sitting at 83p. This is still well below the 130p that the FTSE 250-listed company was trading at before the pandemic.

Profits take huge first-half hit

Having to tap government funding to continue to run a good proportion of its services due to lack of passenger income, the company was still able to report profit-before-tax of £400,000 in the first half of its fiscal year, down from £66.6m a year before. Revenues were lower as well, down to £454.6m from £800.2m. Management said the ability to generate a profit was down to a combination of cost control as well as government and local council support measures.
 
The lockdown measures of the last six months are likely to have had an even bigger effect on second-half revenues than they did in H1, and could have a knock-on effect on the Stagecoach share price. In February, Stagecoach extended a £300m government loan for up to 12 months due to uncertainty over when transport was likely to return to normal.

As restrictions are lifted, Stagecoach is ready to start returning to a normal service. On the additional government funding, Stagecoach chief executive, Martin Griffiths, said: "This funding is designed to help transition our public transport networks from lockdown to more normal levels. It is important the right level of resources remain in place to ensure public transport operators can continue to provide local communities with the services they need."

In other funding news, Stagecoach also won £9m from the Scottish government to help put zero-emission buses on the road. This figure will bolster the £12m that Stagecoach will invest itself.

What’s next for the Stagecoach share price?

The full-year results aren’t likely to paint much of an improvement on the first half of the year, but as we look ahead to the next 12 months, maybe management will be able to paint a more positive outlook.

Griffiths retains a positive message: "We remain confident that there is a strong and positive future for public transport as we emerge from the Covid-19 pandemic."

Stagecoach announces its results on Wednesday at 7am. Will the latest numbers help steer the Stagecoach share price in the right direction?


Disclaimer: CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.

burger-close