I think there are a few playing games with the share price to increase the appeal of what will still be a very healthy dividend for any income portfolio. The last RMG update also mentioned progressive dividend which displays confidence. I've decided to pick up some up on the present weakness for that very purpose and to add to an income portfolio.
Whereas I appreciate that RMG trade in many countries most of the goods that I order online is being delivered to my door by Royal Mail and the parcels division is faring well. This online trend seems to be behind high street store closures and looks set to continue as Marks and Spencers only in the last few days have become the most recent announcee of store closures over the next few years.
Will add the same again on any consequent 10% falls.
"The Board is recommending a final dividend of 16.3 pence per ordinary share, payable on 31 August 2018 to shareholders on the register at the close of business on 27 July 2018, subject to shareholder approval at the AGM on 19 July 2018. This gives a total dividend for the year of 24.0 pence."
(Sharecast News) - JPMorgan Cazenove downgraded Royal Mail to 'neutral' from 'overweight' due to the recent re-rating in the share price, the lack of positive catalysts ahead and a more operationally challenging period.
JPM, which upped its price target on the stock to 561p from 530p, said the revenue outlook for the company is broadly unchanged, with UKPIL revenue likely to remain around flat over time.
It expects a stronger parcels environment - possibly due to temporary Amazon trends - to broadly offset a weaker letters market. In addition, it argued that incremental parcel revenue growth has a higher variable cost component, such that its ability to fall-through to profitability is more limited.
As far as the cost outlook is concerned, JPM expects the rate of per-hour wage inflation at UKPIL to accelerate from 2.5% in FY18 to around 4.5% in the medium term. UKPIL cost inflation, meanwhile, is expected to accelerate by around 1% as a result of this, requiring approximately £70m of additional annual cost avoidance to hold profits flat over time.
"Combined with the revenue outlook...we believe this is likely to put downward pressure on profitability over the medium term," it said.
JPM said that on its forecasts, Royal Mail trades on a free cash flow yield of about 7%, which is a similar level to peers.
Royal Mail (RMG) management is pushing for more productivity but Liberum believes more is needed to stop it missing target like last year.
Analyst Gerald Khoo retained his sell recommendation with a target price of 450p on the shares, which fell 6.1% to 561.4p yesterday.
Full-year results were at the top end of the range, driven by better-than-expected performance in the parcels division and strong growth in its logistics arm.
A mixed outlook has uncertain implications for consensus estimates, said Khoo. Management expects parcels volume and revenue growth to at least match the previous year, but there is clear caution on letters, where the volume decline is seen at the worse end of the long-term range, with downside risk if business uncertainty persists.
He added that although management is aiming at the upper end of its productivity improvement range after missing last year we believe more is needed.
Decided to sell my last 1000 that I bought on the market today only @554, but did sell yesterday @600 Short term its too risky to watch my profits disappear. Could recover to 575 but bigger risk of falling back to 500 imo. Still a good long term bet but I still have my free shares and share save which I will keep for the dividends.
Will wait for the turmoil to die down a bit before buying back. So many investors have big profits on RM that its not surprising there's been a bit of a sell off.
Good results, forecasts pretty good for 2018. Good dividend too. It is hard to judge what is the fair value for RM is though, so will watch for now.
Here we are about to find out if the heady rise will last. Sold 1000 today @600 to be on the safe side. Will be watching closely tomorrow with 2 recent sales if required. Quite happy to buy in higher if the outlook justifies it. Good luck all holders.
"Perhaps a bit toppy now? " Not really even at todays price rise.
"That being the appointment of the GLS chairman Rico Back as chief executive. He is a hatchet man who slashed GLS to the bone with his business practice. There is always a price to pay. It is obvious the city has got wind of something that is going to make Royal Mail lots of money. Why do you think the so-called legal protections in the Agenda For Growth were not secured in the latest agreement??. They did not want to bind Moya Greens successor into any legal contract." KH
FEDEX couple of years ago bought TNT express and said in a interview they would be looking at more companies in Europe to Expand there operation. Now Rico Beck has left the helm of GLS he may look at selling it and use the money to increase the technology base in UK and look at new ways to increase the work load.
Moya retires and she gets all the Applause , but did she do a brilliant job or just average. Royal Mail UK. She manged to sort out the Pension issue. Stability with Union for another 3 years and agreement which will bring in technology use providing a opportunity for more cut-back savings. Probably right person at the right time to negotiate a militant Union at the time of Privatisation, but overall we seen very little growth from the UK operations most of the profit increase has come from reduction of Staff.
From nowhere to today GLS parcel company now provide over 30% of Profits for Royal Mail so if it wasn't for this growing operation today's Share wouldn't be hitting new high's. Rico Back excellent contribution to Royal Mail has been excellent and now he takes over in June. It clearly shows the direction RM want to go as they put less importance on Mail or more on the growth of Packets and Parcels
As they would say in accession of a new monarch "The Queen is dead!! Long Live the King!"
We regard the recent broad set of agreements between the two parties as a landmark, Barclays said
The recent agreement between Royal Mail PLC (LON:RMG) and the CWU union over pensions, has removed a toxic element from the stock, in Barclays' view.
The bank has kept its rating at 'overweight' and raised its forecasts following the recent agreement and the parcels and letters delivery giant's February 1 trading update.
We regard the recent broad set of agreements between the two parties as a landmark, Barclays said.
To have closed, with a small surplus, one of the larger defined benefit pension schemes in the UK; to have replaced it with an affordable defined contribution scheme (possibly collective subject to government negotiation); and to have agreed on a pay deal to April 2020, without industrial action, is a remarkable and forward thinking effort by all involved, in our view, the bank said.
The bank cautions that it will still be necessary to see how the moves to a shorter working week and associated changes in working practices develop, but there is now a strong platform, in its view.
Yes, I take into account broker stances as well as targets by all brokers on ones I own. I have successfully in the past used these levels to decease or sell when a target is reached. Example of one recently would be XLM which I sold over 2.21 when the highest broker target at the time was 2.20. There must be a fair amount of other followers as sellers in XLM showed their faces and even before the correction had brought the price back down close to 20%
I have been surprised at the levels reached by RMG in recent days and agree would put it down to relief of the unions and then the tracking funds building back up their weightings ahead of FTSE inclusion. We are not far away from Goldmans 5.60 and maybe we see a close return to the highs of 5.80 - 6.00 range which may then see profit taking or start just before then.
When companies join the Ftse 100 Tackers, Investment Companies and Fund Managers buy into the company, Saying that we dealing some intelligent people so a lot of them could have already bought into the company positioning themselves before the announcement so the effect on the share price might be minimal.
As a betting man still believe there is still a lot of good News Story to come which will help to push the share price forward.
With Moya Green she will view her job completed. Pensions, Share price & a new way forward with ticks by all of them. We could see Rico Back GLS double digit man taking over the top position for a couple of years before a younger man taking over.
Does anyone take notice of broker ratings ? A lot of smaller brokers and pension funds seem to rate RM a lot higher than the big name brokers. Could also be funds buying in before RM is back in the FTSE 100 again.
Who would have imagined that in a situation where the FTSE is now back to 2016 levels, RMG have transformed from a dead duck to a shining star.
Ironically RMG are also back to 2016 SP levels but in a good way.
It seems evident a rerating of RM is going on. Admittedly the sp is only back to previous levels before the long decline to the 370 mark. Some of the brokers have always seemed very negative on RM so I do take some pleasure in those being proved wrong. However RM looks a lot safer stock to hold at the moment. I was pretty sure my further purchase last Friday was a good investment but I thought it would take a while longer to get to these levels.
My own fair value rating on RM is 550-575. Purely based on Dividend and cover. Risk eg Strike threats ,Pension issue, Pay rises also sorted until 2020.
RM maybe boring most of the time but in these uncertain times it seems a good investment.
Yes I do work for RM and I do hold quite a few shares now.
Yes RMG have done a lot on data in recent years and yes, they have it captured. I worked on the Enterprise Data Warehouse that holds the information myself. It's yet to be converted to products just as you say, but the back-bone is already there.
If you are interested in this search Catherine Doran Computer Weekly as I know of at least one related public pronouncement re things I was working on personally. (which is why the above is not insider info). I hope that helps you in your share decisions deshulme. NB: Caterine might not be there now - but she was CIO at the time.
Held £5K for two years past. Sold for a profit of £87 which with EXCELLENT dividends was £625 profit over two years or 6.25% per annum in a Tax-free self select ISA.
iii attracts a lot of Day Trader and short term comment. It would do - those guys are about on the sites to post more often, but the above is an another definition of success. I have experienced next to no equity growth with RMG.L but the income story has been very satisfactory - so far.
Time to move on because the share has a bit too much of the "interesting times" about it recently. It's someone else's growth tip or perhaps their next big mistake.
Good luck if this is your personal purchase point!
Looking through the agreement it may look as the management have given Royal Mail have had a bad deal, butLooking through the small print Royal Mail now have agreement so Data Capture from Various forms of technology can be used for various actions to cut costs and improve visibility to many business customers.
At no extra charge 2D bar-codes have helped to keep large letters & small packets at a very competitive price which complement USO deliveries. Quick easy to handle and very often meaning a first time delivery with visibility for the customer on deliveries. These are seen by Royal Mail Sweat Spot which are helping increase revenue each year since the bar-codes have been introduced.
The biggest selling point will be when Royal Mail release the information to the public so when someone sends a Parcel they can access the information when, where and GPS pointer on a map where the Postman was standing when he scanned and delivered the item.
I'm pleased with the increase in SP. The markets like nothing better than long term stability in a company. It did somewhat temper what I was going to write.
I needed to return 24 rolls of wallpaper this week, 2 boxes with a total weight of c 24Kg. The online quote I got from Parcelforce for a collect and next day delivery was £44. For the same service, DPD quoted £20! I would have liked to support PF but not with that differential. With parcel freight being the future, this company needs to be a bit more competitive or it's going to start to lose out.
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