(NEX) National Express Group

Number one tip - Dividends

www.dividendmax.co.uk

http://www.dividendmax.co.uk/sectors/travel-and-leisure/companies/national-express-group

New Rating
Company Rating Target Price Potential Upside/ Downside Contributing Broker
Go-Ahead Group Buy 1550 27.2% Espirito Santo Investment Bank Research
National Express Group Buy 250 19.4% Espirito Santo Investment Bank Research
Stagecoach Group Buy 270 8% Espirito Santo Investment Bank Research
http://bit.ly/ru4O51

Inter-National Express
By Lee Wild, 04 November 2011
http://www.investorschronicle.co.uk/2011/11/02/tips-and-ideas/share-tips/brokers-tips/inter-national-express-WP6iFRW3G0LqVzlfFzLviJ/article.html
Brokers' tips
What's new
Everyone loves a bargain, especially when money is tight, and National Express has proved coach travel is no exception. A £9 ticket offer this summer helped third-quarter sales rise 6 per cent at the coach business, driving profits higher. Combined with good progress abroad, it steered group revenue up 5 per cent, as expected.
What's more, and apart from a one-off £5m charge to cover an employment lawsuit in the US, there were no surprises. Despite all its troubles, Spain, where National Express is the largest coach and bus operator, delivered 7 per cent revenue growth - more locals choosing to holiday at home, it seems. However, North America was the driving force. With the $200m (£125m) acquisition of Petermann sealed, and contracts for a net 600 new buses won, school bus revenue charged up 10 per cent during the three months to September - and $40m of cost savings are already in the bag.
On the UK buses, sales growth slowed to 2 per cent, although an identical decline in concessionary fares was more than offset by commercial revenue growth of 5 per cent in the West Midlands. Reassuringly, margins were stable, although a 6 per cent rise in UK rail revenue lagged reported growth of 8 per cent in the first half.
Bank of America Merrill Lynch says...
Buy. Following a solid update, we have raised our estimates for 2011 by 2 per cent, driven primarily by strength in UK rail, North America and Spain. We now expect a full-year underlying profit before tax of £190.7m and adjusted EPS of 27.7p. Our price objective also moves marginally higher, up to 305p from 300p, suggesting 33 per cent upside. The shares trade on a forward PE ratio of 8.3, a discount to the sector average of 9.5, which is unjustified in our view, given the medium-term margin opportunity in UK bus and the growth platform in Spain.
Shore Capital says...
Hold. Our recommendation is unchanged. The UK business continues to struggle given the economic backdrop; it is Spain and North America that still provide much of the growth for the group. Management expects further progress from both markets in 2012, too, for both revenue and margins. However, with limited involvement in rail and a tough UK backdrop, we believe better value exists elsewhere, notably Stagecoach - given that National Express's shares trade at a slight premium to the rest of the sector when rail profits are excluded. We retain our full-year forecasts for pre-tax profit of £182m, equating to EPS of 25.9p.
IC VIEW:

Spanish and North American growth is impressive and foreign expansion makes sense but, without any meaningful income from rail, pressure on earnings is a worry. Moreover, National Express will lose the East Anglia franchise in March 2012 and could lose its c2c franchise the following year. With net debt at more than £600m, winning other rail contracts looks unlikely and, at 222p, the shares are up with events. Fairly priced.

http://www.ft.com/cms/s/0/e3da29be-0468-11e1-b309-00144feabdc0.html#ixzz1cTlt58K6

November 1, 2011 2:00 pm
Stagecoach and National Express thrive abroad
By Alexandra Stevenson

Strong growth in international markets helped to offset weaker demand for bus services in the UK at National Express and Stagecoach, the rail and bus operators.
In trading updates on Tuesday, the companies also reported higher year-to-date growth from their UK rail services, which account for roughly half of their total revenues.

“It will get tougher for the bus operators with the rise of unemployment [in the UK],” Karl Burns, analyst at Shore Capital said, adding that the operating model of both companies allowed them to cut back on bus services more easily during tough economic times.
National Express said customers seeking “better value transport services in a weak domestic economy” drove revenues up 7 per cent at Alsa Bus and Coach services, its Spanish bus operator, in the nine months to the end of September.
The company added that revenues in its North American school bus business rose 10 per cent in the period. National Express expanded in the US in September, paying $200m cash for Petermann Partners, an Ohio-based bus operator.
But the robust performance in Spain and the US compared with more modest revenue growth of 2 per cent in the UK bus operations.
Stagecoach said it had seen 12 per cent revenue growth in North America in the five months to the end of September. The company’s fastest growing regional business is Megabus, a service based on the budget airline model.
While Stagecoach does not provide separate numbers for Megabus, Mr Burns said the business had profit margins of about 20 per cent in a market where it competes directly with domestic airlines offering shorthaul flights.
Steven Stewart, Stagecoach’s director of communications added, “There’s definitely signs that we’ve been attracting people that previously took their car or the airlines.”
Stagecoach reported growth of 2.2 per cent in the UK, where it operates bus services in cities such as London, Liverpool and Newcastle.
Full-year results for both companies should be buoyed by continued growth in UK rail businesses.
Stagecoach, which operates the South West and East Midlands rail franchises, reported an 8.7 per cent increase in its rail business revenues, and 9.7 per cent growth in revenues for Virgin Rail Group, in which it has a 49 per cent stake.
National Express, which operates the c2c and National Express East Anglia franchises, reported 6 per cent revenue growth in its UK rail business.
National Express said on Tuesday it did not expect proposals by local transport authorities to introduce tickets valid across rival operator services to cause any “significant changes” to its operations.
Shares in National Express shares closed down 1.9 per cent at 225.8p, while those in Stagecoach closed down alomst 4 per cent at 238.3p.