Stagecoach trying to by Travel West Midlands

[the trainbasher]

@Winston I think Stagecoach would have constantly invested in the west midlands on a similar standing to Manchester.

As an aside I could see nx merging with stagecoach or go ahead in the future. Although Abellio would be an interesting option.

Depends on if a offer that nx found suitable and the shareholders agree...

[winston]

@Winston I think Stagecoach would have constantly invested in the west midlands on a similar standing to Manchester.

As an aside I could see nx merging with stagecoach or go ahead in the future

@ the trainbasher possibly, but Manchester is a bit of an exception to the rule, if you look at a similar sized op which is one of Stagecoach's top earner i.e. North East they don't receive anywhere near the number of new buses that Manchester gets. To be fair, I don't think anyone could now argue that NX aren't now investing heavily in the West Midlands and that it looks set to continue for the forseeable.

Realistically, NX merging with Stagecoach would create the largest amount of competition issues / may be potentially required to make a number of divestment as a result, as follows:

NX Coaches vs Megabus
NX Dundee vs Strathtay
NX Coventry vs Stagecoach Warwickshire

I would quite like to see NX merge with either First Group or Go-Ahead Group, a deal with First Group shouldn't have any issues in the UK, however, a combination of both their US school bus businesses may be a problem to get past the US competition authorities? I wouldn't want to see that happen

Go-Ahead group again would have no competition issues at all and I would quite like to see the Go-Ahead philosophy towards its own bus operations rubbing off of NX UK bus division, you would more than likely then get the 'Best Impressions' inspired livery you've all being longing for.....

I would like to see NX Group with a bigger UK bus division, but that is unlikely to happen without a merger with one of the above. Even bolt-on acquisitions seem unlikey after a deal wasn't concluded with First to buy RH & KR

[Bob]

First are a bit rubbish though...look at the state of the potteries!  Neweat bus 7 yrs old and thats only recently been transferred in! Sure theyre about to get about 10 street#####es, wow...

Go ahead though. .different kettle of fish,  local identities etc, although I disagree totally with privatisation of companies that belong to the people they've not done too bad in Plymouth

[winston]

First are a bit rubbish though...look at the state of the potteries!  Neweat bus 7 yrs old and thats only recently been transferred in! Sure theyre about to get about 10 street#####es, wow...

Go ahead though. .different kettle of fish,  local identities etc, although I disagree totally with privatisation of companies that belong to the people they've not done too bad in Plymouth

First Group have been struggling caused by years of poor HO office decisions/policies which included overstretching the group by acquiring Laidlaw & taking on so much debt. However, to be fair they are now slowly but surely starting to tackle their problems and things are starting to improve. Due to the size of the group they can't all be tackled overnite and not all areas improved at the same time and it is going to take time (another 3+ years) for First UK bus division to get close to where it once was. For me, First Group have some large urban / former PTE operations which are very attractive and share many similarities with NXWM i.e. Bristol, Glasgow, Manchester, South Yorkshire & West Yorkshire etc

[Bob]

Could arriva take them over? Maybe transfer a few nice old darts in? Lol

[winston]

Could arriva take them over? Maybe transfer a few nice old darts in? Lol

I was waiting for that....  :P

NXWM don't do Darts....

The only real overlap for a combination of NX & Arriva would be Arriva Midlands vs NXWM, I know which one I'd divest... & possibly ALSA vs Arriva Spain

[Justin Tyme]

Until around 12 months ago I would say that NXWM probably would have been better off with Stagecoach.  But the investment in new vehicles, refurbishing the existing fleet (which looks cared for now), AVL and so on has changed the picture.

So NXWM is on the up, and so is First - although First have a way to go before it is in a financially good place, it seems.  Go Ahead's star has gone down a bit recently.  Stagecoach continues to perform well, but as Winston says has a substantial presence in the Coventry area.

I think NXWM is best off just as it is.

[Tony]

First are a bit rubbish though...look at the state of the potteries!  Neweat bus 7 yrs old and thats only recently been transferred in! Sure theyre about to get about 10 street#####es, wow...

Go ahead though. .different kettle of fish,  local identities etc, although I disagree totally with privatisation of companies that belong to the people they've not done too bad in Plymouth

First Group have been struggling caused by years of poor HO office decisions/policies which included overstretching the group by acquiring Laidlaw & taking on so much debt. However, to be fair they are now slowly but surely starting to tackle their problems and things are starting to improve. Due to the size of the group they can't all be tackled overnite and not all areas improved at the same time and it is going to take time (another 3+ years) for First UK bus division to get close to where it once was. For me, First Group have some large urban / former PTE operations which are very attractive and share many similarities with NXWM i.e. Bristol, Glasgow, Manchester, South Yorkshire & West Yorkshire etc

I haven't worked it out, but I suspect NXWM's and Stagecoach Manchester's average age will not be that different, specially at the end of this year with 100 new buses in the West Midlands. SM still have P, R & S reg buses in use, just the same as NXWM, infact they still have 2 'R' reg Spectras in use (sound familiar?) And at least NXWM is 100% low floor. Loads of V/W reg Tridents, so no difference their from NX's Presidents and when some local operators round here buy an S reg dart it is called knackered, yet SM still operate them!

[pb2012]

Go ahead would be probably the only group apart from those outside the uk with a chance of a merger due to competition issue's.

[winston]

Until around 12 months ago I would say that NXWM probably would have been better off with Stagecoach.  But the investment in new vehicles, refurbishing the existing fleet (which looks cared for now), AVL and so on has changed the picture.

So NXWM is on the up, and so is First - although First have a way to go before it is in a financially good place, it seems.  Go Ahead's star has gone down a bit recently.  Stagecoach continues to perform well, but as Winston says has a substantial presence in the Coventry area.

I think NXWM is best off just as it is.

Justin,

I disagree with who is currently favored between Go-Ahead & Stagecoach, Go-Ahead Groups shareprice is currently hitting new 52 week highs, whilst Stagecoach's share price appears to have peaked as is now falling back (for now at least)

The Motley Fool also favours Go-Ahead over Stagecoach, as Go-Ahead has recently upped its profit guidance & said that it will now beat market exceptions for the year, whilst Stagecoach have announced that they will meet market exceptions. Go-Ahead's shareprice has advanced since winning the TSGN rail franchise recently announced, The Motley Fool also Favour go-Ahead as a potential takeover target.

http://www.fool.co.uk/investing/2014/06/25/buses-railways-a-safe-investment-right-now/

(Article below)

Buses & Railways: A Safe Investment Right Now?

Do Stagecoach (LSE: SGC), Go-Ahead (LSE: GOG), FirstGroup (LSE: FGP) and National Express (LSE: NEX) offer meaningful upside these days?

Stagecoach Reports

Stagecoach stock is bucking the trend of a declining market on Wednesday in the wake of decent full-year results — which, however, were nowhere as good as Go-Ahead's. "We have met our expectations for the year," Chief Executive Martin Griffiths said. That's not good enough.

Revenue and earnings came in broadly in line with expectations and they were only slightly higher than in the previous year. A 10% dividend hike doesn't really change the investment proposition. Based on trading multiples, operating profitability and growth prospects, Stagecoach stock looks expensive. Let's move on.

Go-Ahead

Go-Ahead surprised the market last week, when it reported preliminary results for the year and raised its guidance. Driven by the performance of its rail operations, the bus and rail operator will continue to deliver growth, better profitability and solid earnings. Its stock is up 7% since preliminary results were announced.

Executives know how to manage expectations. The equity valuation of the company has been rallying since December, when Go-Ahead said it expected its full-year results to beat expectations. Will next time be any different? I doubt it will.

Furthermore, long-term upside resides in Govia, a joint-venture between Go-Ahead and France's Keolis that will operate the new Thameslink Southern and Great Northern franchise. Operations will start by the end of the year. The loss of the franchise was terrible news for FirstGroup, in particular, as well as for other Go-Ahead's rivals.

Go-Ahead has a solid balance sheet, which is unusual for bus and rail operators in the UK. Its one-year performance on the stock market reads +63%, while its dividend yield is in line with the market's. There is reason to believe that Go-Ahead could also become a takeover target. The allure of a take-private deal is obvious, although an M&A premium is not priced into its stock.

FirstGroup & National Express

FirstGroup is in restructuring mode. Its debt pile has come down since last year, but management must do more to reassure investors. FirstGroup is a transport operator in the UK and North America; deeper focus on its geographical reach would help it improve efficiency, which means divestments shouldn't be ruled out.

A similar logic applies to National Express, which heavily relies on debt, just like FirstGroup, to finance its operations. FirstGroup and National Express are probably the less appealing investment propositions in the space, although their financials have improved in the last 12 months.

National Express rejected an approach from FirstGroup in 2009. In a way, they belong to each other, and if they managed to sort out their ailing capital structures first, a combination between the two would make lots of sense.

You can look elsewhere for greater returns if you don't fancy the risk profile of these four companies.

[winston]

First are a bit rubbish though...look at the state of the potteries!  Neweat bus 7 yrs old and thats only recently been transferred in! Sure theyre about to get about 10 street#####es, wow...

Go ahead though. .different kettle of fish,  local identities etc, although I disagree totally with privatisation of companies that belong to the people they've not done too bad in Plymouth

First Group have been struggling caused by years of poor HO office decisions/policies which included overstretching the group by acquiring Laidlaw & taking on so much debt. However, to be fair they are now slowly but surely starting to tackle their problems and things are starting to improve. Due to the size of the group they can't all be tackled overnite and not all areas improved at the same time and it is going to take time (another 3+ years) for First UK bus division to get close to where it once was. For me, First Group have some large urban / former PTE operations which are very attractive and share many similarities with NXWM i.e. Bristol, Glasgow, Manchester, South Yorkshire & West Yorkshire etc

I haven't worked it out, but I suspect NXWM's and Stagecoach Manchester's average age will not be that different, specially at the end of this year with 100 new buses in the West Midlands. SM still have P, R & S reg buses in use, just the same as NXWM, infact they still have 2 'R' reg Spectras in use (sound familiar?) And at least NXWM is 100% low floor. Loads of V/W reg Tridents, so no difference their from NX's Presidents and when some local operators round here buy an S reg dart it is called knackered, yet SM still operate them!

You tend to find that although Stagecoach put large quantities of new E400's in to Manchester, they also cascade out a number of E400's that are only a couple of years old for other subsidiaries.

Come the end of 2015 once the next 175 buses have been delivered & older buses withdraw, NX will have a very modern fleet, with a even lower average age than at present. By then all buses will also be in one livery and the refurb program may be on to early NX liveried buses than weren't refurbished

[Justin Tyme]

Justin,

I disagree with who is currently favored between Go-Ahead & Stagecoach, Go-Ahead Groups shareprice is currently hitting new 52 week highs, whilst Stagecoach's share price appears to have peaked as is now falling back (for now at least) ...

Winston,

I am happy to be corrected.  Some months ago I had seen reports that the operational performance of some Go-Ahead companies had gone backwards, hence my comment, but things can't be bad with those sorts of financial results.

[winston]

Justin,

I disagree with who is currently favored between Go-Ahead & Stagecoach, Go-Ahead Groups shareprice is currently hitting new 52 week highs, whilst Stagecoach's share price appears to have peaked as is now falling back (for now at least) ...

Winston,

I am happy to be corrected.  Some months ago I had seen reports that the operational performance of some Go-Ahead companies had gone backwards, hence my comment, but things can't be bad with those sorts of financial results.

Justin,

It's only been in the last month since Go-Ahead announced they had been awarded the TSGN franchise (23/5) & their pre-close trading update release (19/6) where they said rail profits would be ahead of their previous expectations. Go-Ahead have also set themselves a target to achieve £100 million operating profits from their bus division by 2015/16, so they will need to deliver. There is also the chance of further acquisitions as Go-Ahead only has nett debt of circa £70 Million

[PM]

I agree with what Tony and Winston have said about Stagecoach. Yes, Manchester has new buses but newish buses tend to be cascaded out and many so-called star fleets operate fleets with quite old MAN/alx300's, dart/alx200's and even step entry vehicles.

Certainly in the North East, yes, Newcastle and Sunderland have new vehicles but much of the Teesside operations seem to be run by S and T reg unrefurbed MAN's which look pretty tired and looking inside, clearly haven't had their seats re-covered in a long time.

Go-Ahead and First seem to be on the up but Stagecoach has a patchier fleet than you might imagine...

[Tony]

And the West Midlands could have ended up with step entrance buses with service numbers on bits of paper in the windscreen.  Oh sorry that is what I have just photographed actually happening