...which is one I suggested getting on board back in June this year when it was sub 1600p.
At that time I felt 1800p was a reasonable target and I flagged that they had arrived at this destination in this post in October. So if you didn't take your profits back then and stayed on board for the finals and the annual dividend then you might be interested in the final results announced today.
As we have had traffic statistics for September from Easyjet (EZJ). These saw a continuation of growth with passenger numbers up by 7.6% on the month and 6% year on year. The load factor (how full the planes are) was also up by 0.9% on the month and over the year to a decent 93.1% & 91.5% respectively. They also re-confirmed that their full year profit before tax guidance continues to be within a range of £675 million to £700 million for the year to 30 September 2015.
Regular readers may re-call that I suggested boarding this one back in June when it was trading below 1600p and at the time I suggested that 1800p could be a reasonable target for it. This price has now been achieved and this has given a decent 20% or so out performance against a soggy market over the same period.
So trader types might want to think about taking profits up here and go looking for something else which has perhaps suffered more in the recent market declines. While medium term investors might want to stay on board this well managed group as it remains reasonable value on around 12x next years earnings with a 3.5% yield. It also still looks OK if not outstanding on the Compound Income Scores with a 79 score, while Stockopedia's Stock Rank is 87 which interestingly is driven more by quality and momentum rather than value.
It is also worth noting that this one unusually only pays its dividend once a year so the final and only dividend is due to be announced soon and this usually goes xd in February before being paid in March. So if income is important to you then it might be worth staying on board for this years dividend which is expected to yield around 3.3% at the current price of 1809p. In addition there is also a possibility of a special dividend as they paid one of these back in 2014 and they still have large cash balances.
Technically, I also note that the previous 12 month highs were closer to 1900p, so as the stock is not yet over bought and with a possible tail wind from a stronger market if we do get a year end rally then I guess it is possible it could push on up a bit further too over the results and the year end perhaps?
We have had an update today from Easyjet (EZJ) which I suggested as a trading buy back in June when it was trading under 1600p. They have today increased their profits guidance for this year by around 6 to 9% as they raised the range for expected pre tax profit from £620m - £660m to £675m - £700m.
This was despite the head winds from some one off costs that they highlighted earlier in the year. It comes on the back of record passenger numbers of over 7 million and a new record load factor of 94.4% for any month set this August. With the positive effects from lower oil prices and an offset from currencies still being broadly where they were this has led to the increased guidance.
This is likely to leave the shares on around 12x this years probable upgraded earnings which may then fall to around 11x for the year to September 2016. On the yield front the shares still offer around 3.5% which may also get edged up further if the upgrades lead to a higher dividend payout or they could consider another special dividend given the cash rich balance sheet. Thus although the shares are rapidly closing in on my original 1800p+ price target (1780p +6.5% today) they do still look reasonable value.
Trader types might want to think about taking profits if it does make it up to the 1800 -1900p range where the gap around 1830p from may lies and where resistance from previous peaks around 1900p will kick in. Otherwise Investors might want to stay on board as it seems like a well managed company trading at a reasonable valuation which is benefiting from recovering consumer incomes and lower costs on the back of lower oil prices. They are also gaining from the trend towards increased leisure travel being created by the low cost airlines themselves, although they do operate in a complex business with many variables which are often largely outside of their control. This can make profits quite variable and difficult to forecast in the short term but the trends have been strongly positive overall from this over the last five years.
The beer comes from Marston's (MARS) who had a reasonable looking trading update for the 41 weeks to 18 July 2015.
This saw their destination & premium locations as well as their taverns reporting positive like for like (LFL) sales growth of 1.7% and 1.6% respectively. Encouragingly they had seen stronger trading in the last 10 weeks with +2% LFL, operating margins up slightly year on year and they are on track to open 25 new pubs. Meanwhile they continue to dispose of lower return wet led pubs and move more towards franchising some of these. Their brewing side also grew by 4% and was this boosted to 10% by the acquisition of Thwaites during the year.
They made some interesting comments on the effects of the proposed living wage which has been seen as a negative for the general retail and hospitality trades. On this they said:
"The recently announced Government plans to introduce a mandatory Living Wage by 2020 are consistent with our expectation that the gap between the National Minimum Wage and the Living Wage would be closed over time. The additional cost of meeting the higher target of £9 per hour by 2020 will mean that wage costs will be modestly greater than we had expected, but the impact compared to our plans is mitigated by the fact that we had anticipated increases above the rate of inflation, and the lower rate of corporation tax from 2017."
The shares are a bit of a curates egg as they have drifted back recently below 160p where they trade on around 11 to 12x earnings with a yield of 4.5% which is expected to grow by around 5%. The yield and the shareholders 20% discount remain the main attractions on this one, however the balance sheet is quite highly geared albeit they do benefit from some reasonable property backing.
Meanwhile if you've got bills you've gotta pay then you may have come across or used one of Pay Point's (PAY) terminals in one of the 27,000+ shops that they operate in. They have had an in line Q1 IMS statement today showing modest growth so probably nothing to get too excited about there in the short term, although the shares have responded positively first thing being up by about 1% in a weak market. So it seems like steady as she goes but I should have more to say on that tomorrow.
The chat part today comes in the form of Q1 trading update from the Quad play telecoms provider Talk Talk (TALK). In this despite only delivering 3.5% revenue growth they say they are confident in delivering 5% for the full year together with strong EBITDA and free cash flow growth. They did however warn that H1 would look weak and that much of the growth would be h2 weighted due to the timing of the delivery of their on going (MTTS) cost saving plans. The market doesn't seem to like this that much as the shares have been marked down by 6% first thing as it seems to be a familiar pattern of jam tomorrow with this one as they continue to invest in growing the business. Despite this they have continued increasing the dividend rapidly and the cover has therefore eroded to around 1x. Thus the strongly growing 4% yield seems attractive on the face of it, but it may be vulnerable to the forecast growth slowing or stopping if they don't end up delivering the growth in profits and cash flow that they are expecting. Otherwise the shares don't seem that attractive on other valuation metrics like the PE of 25x so a hold at best for yield I would say.
Finally before I go we had a quarterly update from Easyjet (EZJ) which saw better revenue per seat than the guidance they issued in May. The better than expected revenue per seat was driven by trading in the UK and beach routes across Europe in May and June & the successful implementation of revenue management initiatives, offsetting in part the impact of the movement in Easter and the French Air Traffic Control strikes in April which together decreased revenue per seat at constant currency by three percentage points. They also grew capacity, passenger numbers and the load factor.
So it seems quite positive overall and the market agrees as it has marked the shares up by 4% this morning to 1736p where it is climbing nicely toward the 1800p price target I set when I suggested it as a trading buy earlier in the year when it was below 1600p in my Prepare for boarding post, I hope some of you got on board and are enjoying the flight too.
Any way must fly got some plumbing to try and turn my hand to - toodle loo.
On a quiet day today just a quick update on Easyjet (EZJ) which I have written up in the past. Today they have put out one of their regular traffic stats announcements which show passengers up 6 to 7% or so over the last 12 months and in May this year, while the load factors were between 91.2% and 91.6% over the same time periods. These are not that significant but at least they continue to move in the right direction.
Last time I commented on this one I suggested that it might be interesting in the 1550p to 1600p range which might offer some support, with 1570p being the 50% retracement of their rise over the last year and which often acts as a strong support. Their most recent update was not that well received and led to some downgrades to earnings which has sent the share down into this price range and they did see a recent intra day low of 1574p.
I also note that the downward momentum or loss of altitude in this case is slowing and there is positive divergence on the RSI (lower price not matched by a lower RSI). This is often a precursor to a bounce or a turnaround and I not the gap on the chart around 1800p. So given that this is a volatile share, but it seems to be in a support area, I think this might be a good point to get your boarding card and get on board for a trade on the Easyjet <1600p flight to 1800p - perhaps.
Finally here is a short video about the most efficient way of getting people on board a plane. It turns out that the low cost airlines...no I won't spoil it for you bon voyage.