It’s been a bumpy ride for shareholders of roadside recovery firm AA after its £1.4bn IPO over a year and half ago.

18-month chart of  AA plc

(source CMC Markets, 31/3/16)

Shares have dropped as much as 40% in the last 12 months with the latest leg lower taking place after the half-year update in September. Shares bottomed not long after at just above its IPO price of 250p and have been struggling to make headway since. The all-time low rests at 236p, hit not long after the IPO.

A lot rests on the AA putting its household name to the best use in the digital age. The company has lost out to breakdown competition but cross-selling new products through its revamped website and smartphone apps bring new opportunity.

Full year earnings are forecast to fall by 10% so the only chance for investors to get rescued comes from positive guidance for the year ahead. Expectations in the the city are for earnings growth of 16% in 2016 and 15% for 2017.

The AA is expected to pay a 9p dividend for the full-year ending January 2016, rising to 10p for the following year offering a yield of 3.2% then 3.6%.


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