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Progress on Energy and Aviation divisions in focus at forthcoming results
Thursday 13 Oct 2016 Author: William Cain

Logistics outfit Stobart (STOB) will update the market on progress towards a £28m profit target across two key divisions when it reports half year results on 27 October 2016.

Stobart is aiming to deliver £20 million of earnings before interest and non-cash costs (EBITDA) in its Energy biomass supply division and a further £8 million of EBITDA in its London Southend Airport asset.

STOB - Comparison Line Chart (Rebased to first)

A trading update (8 Sep) indicates the plans are on track and there could be room for further surprises when results are published, according to analyst Ken Rumph at investment bank Stifel.

‘Stobart’s first half (to end August) update confirms the significant progress made by the Energy biomass supply division – more than sufficient to meet its £20m target,’ wrote Rumph
on 8 September.

On top of the £28m it aims to make from Energy and Aviation, Stobart also has a number of other profitable assets. It has a 49% stake in the famous Eddie Stobart haulage brand and full ownership of an infrastructure and investments portfolio as well as a rail business.

Rumph estimates Stobart will deliver pre-tax profit of £28.7m in the year to 28 February 2017 and earnings per share of 6.1p, both an increase of 56% year-on-year. Dividends, forecast at 12p a share, are sustainable Rumph argues. There could even be higher payouts because of disposals of some of Stobart’s infrastructure assets.

Earnings growth and cash return potential at a classy business. Buy at 168p.

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