A German Teutonic train ratio tells you that FirstGroup remains cheap suggests Chris Bailey

Management Resource Solutions – an open letter to Nomad Arden: suspend the shares NOW! Read HERE
 
I read in the business pages of one of the deadwood press publications that 'a £2.6 billion standoff over pensions threatens to derail a string of train franchises', which could well hit hopes to award long-term franchises in some parts of the country including the West Coast mainline which I live close to.  Another problem for that top performing politician Mr Grayling to deal with.  Why is his name never mentioned as a future Prime Minister? Moving on from comedy politics, articles such as the above unsurprisingly have kept train operator financial ratios and multiples towards the lower end of the broader prevailing stock market range. On top of this many of the individual names have not helped themselves and I have detailed at length in my articles on FirstGroup (FGP) its brush with corporate disaster by simply having too much debt.
 
BREAKING: Now Illumina sues Yourgene Rival – Great News says Tom Winnifrith HERE
 
Fortunately my instinct is that whilst you cannot say its range of transport solutions are powering ahead, at least it is moving forward due primarily to the strong cash flow generation from its bus operations, especially the student bus operations in the US and the UK. Another financial metric insight struck me as helpful late this week. Do you remember the name Arriva in the UK listed transport and related space?  A few moons ago it was acquired by Deutsche Bahn and I see that - as is often the nature of things when markets go up - the owners are wondering if they can square the circle and a little bit more by re-hawking the company back onto the UK bourse, especially as it has a bit too much debt itself.
 
Read HERE: Low & Bonar – warns on current trading, ‘expects improving trend during remainder of year’ BUT…
 
Anyhow I was struck by one statistic in a write-up that I saw that when Deutsche Bahn bought Arriva it paid just under one times revenues...and now having bumped up revenue/turnover via a European expansion it hopes for a similar multiple in any re-IPO. By contrast FirstGroup trades at about one-sixth of revenues or about one-third if you look at it from an EV perspective (i.e. adding net debt to market cap) despite also having a mix of bus/train operations and some international diversification.
 
What Britain's Top Fund Manager Advises Now. Read HERE
 
Now my guess is that Deutsche Bahn is going to be in for a rude shock if it tries to crack on with an IPO at that sort of revenue multiple, especially if it loads the company up with debt (as it is likely to do).  But it is also another signal to me that, despite all the headlines, the recovering FirstGroup story remains a good 'un, aided further by good cash flow generation and an ability to refinance bonds. I remain bullish and hope for a return to the c. 120p/share levels that private equity was offering (and should have had its arm bitten off) a year ago.
 
easyJet slides again but time to pull back on the share purchasing throttle? Read more from Chris Bailey HERE

Filed under: FirstGroup, Management Resource Solutions, Illumina, Yourgene, Low & Bonar, fund manager, easyJet

Versarien - the point at which it must deliver is approaching says Lucian Miers

09/17/2019

5 slam-dunk sells for 2019 - September update. Nigel Somerville writes...

09/16/2019

Barclays & Lloyds fess up to new PPI horrors... but that is fine. Chris Bailey writes...

09/12/2019

Finding it hard to find any reason not to invest in Jadestone Energy says Gary Newman

09/11/2019

Ferrexpo - time for another go says Lucian Miers...

09/10/2019

Intu Properties - when even a takeover cannot help...

09/09/2019

Boohoo says boo hoo to the doubters. Chris Bailey writes...

09/06/2019

President Energy can weather the economic problems in Argentina considers Gary Newman

09/05/2019

IQE - why that shiny new debt facility?

09/04/2019

Horizonte Minerals - after positive news on funding...

09/03/2019

Whilst some go back to school, M&S goes back to the FTSE-250...

09/02/2019

Optibiotix - interims do not impress but it really is a strong buy argues Tom Winnifrith

08/30/2019

Another Crack at Wayfair says Lucian Miers

08/29/2019

Motels, gold and the stock no active investor should buy. Chris Bailey writes...

08/28/2019

ITM Power - a buy on a long term investment basis considers Peter Brailey

08/27/2019

Rockhopper Exploration - update following further positive news on Sea Lion

08/23/2019

Ferguson plc & woe betide the future of the UK stockmarket?

08/22/2019

Wood Group - I remain a buyer says Chris Bailey

08/21/2019

ConvaTec - still a buy after further management change?

08/20/2019

A share tip of the year for 2019 update...

08/19/2019

GVC raises numbers but please no more number of the beast share sales says Chris Bailey

08/16/2019

The thoughts of Lucian Miers on the Burford fiasco

08/15/2019

Gold - rushing ever-higher. What I will do reviews Nigel Somerville...

08/14/2019

Eco Atlantic - what to do after a great first drill?

08/13/2019

Spin City at G4S. Chris Bailey writes...

08/12/2019

Aviva, Cineworld and Funding Circle reviewed by Chris Bailey

08/09/2019

Thomas Cook - doing the Fandango. Lucian Miers writes...

08/08/2019

Chris Bailey confesses he is now a Dominos Pizza customer, but to buy the shares?

08/07/2019

Volex - ahead of expectations. Buy say Tom Winnifrith & Steve Moore

08/06/2019

Petra Diamonds could still turnaround considers Gary Newman

08/05/2019

Opportunities in Barclays, Lloyds and ConvaTec? Chris Bailey reviews...

08/02/2019

Fresnillo - big drop in share price an opportunity? Gary Newman reviews...

08/01/2019

Columbus Energy Resources - a buy ahead of South West Peninsula drilling?

07/31/2019

Tesla Q2 another milestone on the road to bankruptcy and ruin says Lucian Miers

07/30/2019

Amino Technologies - a recovery buy suggest Tom Winnifrith & Steve Moore

07/29/2019

I remain calm and collected amidst the heat, M&A activity & as Sage stumbles says Chris Bailey

07/26/2019

RockRose Energy tip up nearly 450%, so what now reviews Gary Newman

07/25/2019

PZ Cussons - losses in Africa... but still a buy? Chris Bailey reviews...

07/24/2019

Block Energy - let winner run or take a healthy profit?

07/23/2019

Sell Netflix short as US subscribers back off says Lucian Miers

07/22/2019

OptiBiotix Health - scientific and commercial update adding to confidence?

07/19/2019

Thoughts On Thomas Cook & Kier from Lucian Miers

07/18/2019

Burberry - excitements sufficient? Chris Bailey reviews

07/17/2019

KEFI Minerals - Q2 2019 operational update, shares remain a Buy says HotStockRockets

07/16/2019

Angling Direct could have long-term potential says Gary Newman

07/15/2019

Hurricane Energy - Lancaster early production system delivering, Buy says Peter Brailey

07/12/2019

I remain to be convinced that asset sale will justify the valuation of Sound Energy says Gary Newman

07/11/2019

Imperial Brands goes progressive on its dividend...and the market likes it

07/10/2019

Tesla and me - Chris Bailey writes...

07/09/2019

Woodford Patient Capital Trust - still a sell says Lucian Miers

07/08/2019

Versarien - the only question is WHEN do the shares collapse says Lucian Miers

07/05/2019

Sainsbury - still searching for a strategy?

07/04/2019

Creightons - we having said we expected the results to highlight the value…

07/03/2019

PetroTal - rapid growth possible; Buy says Peter Brailey

07/02/2019

Explorers don't get any more exciting than Eco Atlantic, which is why I have been buying says Gary N

07/01/2019

Vela Technologies - Vibe Group gathering momentum & other potential. A buy from HotStockRockets

06/28/2019

OptiBiotix Health - North America deal; this is big, very big says Tom Winnifrith

06/27/2019

A Welcome Slice Of Luck and Thoughts On Purplebricks. Lucian Miers writes...

06/26/2019

I am poorer for not spotting Porvair...but should I care? Chris Bailey reviews...

06/25/2019

Whitbread - looks to continue to have a plan

06/21/2019

Ashtead - what to do after results statement? Chris Bailey reviews...

06/20/2019

Why the share prices of those involved in West Newton, Union Jack and Reabold, have not rocketed

06/19/2019

Board love at DS Smith whilst PZ Cussons is seemingly bored of talking. Chris Bailey writes...

06/18/2019

Boohoo & Reckitt Benckiser - management matters says Chris Bailey

06/14/2019

KEFI Minerals - remains a Buy

06/12/2019

Purplebricks - a Woodford fave that was a sell before and is now slam-dunk says Nigel Somerville

06/11/2019

Woodford Patient Capital Trust - Sell says Lucian Miers

06/10/2019

Joules - a rare retail jewel?

06/07/2019

Provident Financial - failure squared from man of the moment Neil Woodford says Chris Bailey

06/06/2019

Tesla - a fantastic sell says Lucian Miers

06/05/2019

A FTSE reshuffle look by Chris Bailey

06/04/2019

OptiBiotix Health - still a buy?

06/03/2019

Bilby - recovery potential?

05/31/2019

Shoe Zone - still a buy?

05/30/2019

Thomas Cook - still a sell says Lucian Miers

05/29/2019

Red Rock Resources - unbelievably cheap? Tom Winnifrith reviews for HotStockRockets

05/28/2019

Three shares which rose on a shabby day from Chris Bailey

05/24/2019

Marks & Spencer says it is getting match fit, should you back the rights issue?

05/23/2019

Updated thoughts on WH Smith, Halfords and Greencore from Chris Bailey

05/22/2019

Ryanair - what to make of it following results & those of great peer easyJet last week?

05/21/2019

Anglo Asian Mining - what after stellar 2018 results? Tom Winnifrith & Steve Moore review...

05/20/2019

Genel Energy has great growth potential says Gary Newman

05/17/2019

Getech - 2018 results, remains a buy considers the HotStockRockets team

05/16/2019

Ariana Resources - more positive news as we wait for more numbers says Nigel Somerville

05/15/2019

Bluebird Merchant Ventures - a buy from HotStockRockets

05/14/2019

Purplebricks headed for 50p says Lucian Miers

05/13/2019

Union Jack Oil - potential share price catalyst, as date set for Wressle planning appeal

05/09/2019

Purplebricks - keep selling says Tom Winnifrith

05/08/2019

Reach4Entertainment - 2018 results, much more to come?

05/07/2019

The implied valuation for Bould Opportunities looks crazy - strong sell says Gary Newman

05/03/2019

Optibiotix - full year numbers, the share price reaction wrong says Tom Winnifrith

05/02/2019

Sirius Minerals - the current drop a good buying opportunity? Gary Newman reviews...

05/01/2019

WPP & Royal Bank of Scotland - Chris Bailey reviews...

04/30/2019

Tesla remains a sell after Q1 fiasco says Lucian Miers

04/29/2019

Barclays, Sainsbury & Taylor Wimpey - Chris Bailey reviews...

04/26/2019

Dividend Munchers Easter 2019 update (and still beating Neil Woodford) says Nigel Somerville

04/24/2019

Gem Diamonds looks too cheap down here - buy for the longer term says Gary Newman

04/23/2019

Atalaya Mining remains a buy after recent updates says Gary Newman

04/18/2019

A couple of ShareProphets share tips of the year updates

04/17/2019

Lessons from Plus500 and time to sell more Purplebricks. From Lucian Miers...

04/16/2019

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