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If the market values a stock forward what do you think of the current malaise?
The markets just maybe portend a another lockdown.
Short-medium term what matters most is the ability to service the large debt pile, seeing as net debt reduced last year that gives me a lot of confidence. The share price was 150p pre covid and that was only because of the large debt, get that down further and there's a realistic chance to reach the £2 level again.
There is a mention of bus mileage 94% but the following excerpt states commercial sales 68%:-
'Demand for our regional bus services has continued to follow the changing pattern of COVID-19 restrictions across the UK. We are currently operating regional bus vehicle mileage at around 94% of the level operated around this time in 2019. We saw commercial sales recover to around 60% of 2019 levels in autumn 2020. Sales then dropped from December 2020 as COVID-19 related restrictions were tightened across the UK, with lockdown restrictions applying in most areas. As COVID-19 restrictions have eased, our commercial sales have begun to recover and are now (seven days ended 26 June 2021) at around 68% of the equivalent period in 2019. We are confident of further recovery in commercial sales as restrictions continue to be eased and people regain confidence in travel and in using public transport.'
I think it's highly unlikely work from home is here to stay in its current form. Of that 23% let's say 10% is lost for good, you can offset that with the push to get more people on public transport as the UK continue with the green transition which is taking shape rapidly. In my own calculations I've considered a small overall decrease in passenger numbers in the future.
Now bear in mind the share price is ~45% of what it was prior to covid, do you think the business in reality is worth just 45% of what it was in February 2020 taking into account the profit posted even in the last year???
Excerpt from the 30 June 2021 RNS
' Prior to COVID-19, around 23% of bus journeys outside of London made by residents of England were for commuting and business'
........
I imagine costs are fixed and and once break even is hit any extra passenger numbers drop straight to the bottom line.
Those working from home are saving lots of travelling time and costs. Why would they ever want to return to the office again, so I can see a large percentage of that 23% never returning to the office if they have their way, that's a lot of bums on seats/profits lost.
Adding on those nervous of catching a new variant of Covid and it's not looking to favourable for SGC.
In the short term at least this is a declining business imo.
We're each entitled to our view but this is one of those where you need to move early if it's to be worth the risk of selling and moving money elsewhere. 66p is the price now in which I would load up again, otherwise I'll stick with what I've got.
Anyone selling now must be crazy this is a cracking investment not long back touching £1 those who bought at 90 or 80p and now selling must b mad hold and reap your rewards at Xmas.
Gla
Sadly - and I say this as a beleaguered holder not trying to deramp, it is clear that we are heading into another wave and doubtless there will be some kind of lockdown in the months ahead, which is depressing share prices, especially travel stocks. Fundamentally, SGC is fine, but I expect it to fall further, how far is anyone's guess. Long term it will be ok, but I think people will be encouraged to work from home for some time now, meaning passenger numbers will be subdued. I hope to see it above 100p at some point, but honestly, I think that is years away. Sorry to be the bearer of a bad opinion. Good luck.
Am holding this stocks under valued in my eyes. Cant expect much from the market at the moment everything's down
@Chris: It does make sense, you must consider that the maximum amount of shares traded today represents less than 0.2% of issued share capital, even less as the same shares are often rinsed through, MM’s can sell off book and manipulate the SP and the Algo’s are driving the price down on a very small amount of traded shares. It is a classic case of shaking out the bed wetters for the II’s to mop up. It doesn’t take a lot to spook PI’s who believe the market is about to implode. The shares are being walked down but I believe we have hit the bottom. I bought these, GOG and BP on leverage today as we are coming out of this mess and the markets know it.
This market makes little sense at times
Back in April last year, when no-one knew if a vaccine would ever come along, let alone how long it would take, the sp got to 87p. It then dropped again before hitting 77p in June.
Now, with the astoundingly fast progress that has been made, and 2/3 of all UK adults fully vaccinated, the sp has slid to 72p, lower than it was at the height of the pandemic uncertainty last year. Madness.
I think it's more than passenger numbers and Company debt now, most of the market has been declining over the last couple of weeks something bigger going on I believe the market is predicting something happening soon and pricing it in already.
@harchris you can prove the point. Pick two stocks in the same sector. The one with more debt bounces about more. That’s the way it works
Just walked through Manchester and buses are rammed
Will get out early tomorrow and see what the morning rush looks like (always get the steps in and a coffee)
Yeah exactly Dan. It's why during financial crises defensive stocks with continual demand and lower gearing hold up relatively well. Debt + inability to operate (like last year) is a recipe for disaster - fortunately the transport system is seen as a necessity and the government have stepped in to keep things afloat.
I consider this somewhat a defensive stock in regards to the need to use the bus network whatever the economic backdrop, nobody is priced out. Add to that the green transition going on and the green credentials of stagecoach and we should be on to a winner here.
@tweed - the bit you're missing is that debt drives your risk beta
A stock with higher debt reacts with more volatility than a business with lower gearing. It's too simple to say the share price fall was just revenue related. How much it falls considers the risk beta
HarChris. The reason this share dropped so dramatic at the beginning of the pandemic had nothing to do with debt as most companies have debt but the fact that 1 we was in lockdown and 2 the maximum passengers allowed on a double deck Bus was 30 and I think 16 on a single deck I don't drive those so not so sure. So if the revenue is cut the profits and share price will drop. Cineworld was closed most of the year so profits drop along with the SP. Nearly all share prices have gone down over the past week or two i am not sure why but i do think public transport will grow more in the future as people are encouraged to ditch their cars.
That is not the point I was making - most shares fell as the world entered the pandemic but some far more than others. In general companies with a high debt to equity ratio saw the steepest declines as they were at a little more risk of collapsing (see the likes of cineworld for example).
Seeing as even last year the company was able to reduce its net debt I'm very very optimistic here...
The biggest risk to Stagecoach and the reason it fell so dramatically last year at the start of the pandemic from ~145p to a low of~ 35p was the debt - and yet in the last twelve months they've actually been able to make a profit and reduce net debt.
That surely bodes well for a recovery to 100p once the broader markets look stronger again?
Can't argue with that
I thought i'd done ok at 92p (from the 115p top). Then got some more at 82p!
This is now a very bad investment. But long term we know buses are a driver of the economy and the Gov supports
Just be a longer hold than I thought back to £1
It's been a continuous drop since last week!!! looks like it's going back into the 50s
Wrong again Chris, I'd have complained.
I think it was just bombastic Boris wanting a more symbolic end of restrictions 'freedom day' and a narrative of 'we've kicked the pandemic into touch' whereas the scientists wanted restrictions to stay in place.
In the end it's a sort of compromise.
https://www.independent.co.uk/news/health/covid-uk-antibodies-herd-immunity-b1879643.html
Dan, the restrictions last winter led to record low numbers of flu as a side effect. The ideal scenario is a new way of life where we introduce masks during the winter to protect the vulnerable against both flu and covid. Eventually that should be possible without it reinforcing fear in the minds of the average person.
We also need to understand relative risk. Every death is sad but knowing that during a bad flu season as many as 500 people die a day (over the three month winter period) does help put things in context.
CHRI55 herd immunity is arguably already here...It's worth remembering that around 90% of the UK now has coronavirus antibodies, with that predicted to be above 95% by the end of July - we know the vaccine/infection doesn't provide 100% protection against severe disease but even against the delta variant protection is high...
I'm mixed on the impact of mask
In part i think mask make people feel safe but on the other hand continuing to wear masks also means the "scare factor" remains
If covid is to become like the flu then we need to ditch masks in total
My view is that the gov should offer N95 masks to all so you are no longer tied to whether others wear theirs
Individual choice
But long term we need to drop masks or risk the scare factor forever on public transport but i do understand for some it is still a safety blanket