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Home / Blog / blog / Company Focus || Wheels still turning for coach company || 17-4-20

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Company Focus || Wheels still turning for coach company || 17-4-20

The wheels are still turning for coach operator National Express, which saw a surge in its share price despite its operations mainly stalling.

National Express issued an update on its state of play through the current coronavirus crisis, which has sent its share price soaring from 90.4p in the middle of March to 240.80p at the time of writing.

Obviously, coronavirus has brought severe disruption to the coach operator – the majority of its services have been suspended although some of its contractual customers including local authorities are still providing revenue.

In its update, the coach company revealed it would be scrapping its dividend but that it had secured a £600m credit facility from the Government and the Bank of England as well as an additional £200m from other facilities.

So, will this be enough to keep National Express on the road despite service disruptions or should investors be concerned?

Analysts are impressed with the coach firm’s liquidity – this latest update means it has £200m of cash in hand and £1bn of undrawn facilities which puts it in a strong position. Liberium reiterated its ‘buy’ rating and raised its price target from 400p to 425p, highlighting the firm’s cash flow and liquidity headroom. The analysts also said that the company’s position had ‘improved’ since its last update and that it had provided greater clarity about how many services were operating and how much contractual customers were paying.

Prior to the current pandemic, National Express looked to be in a good position – its latest trading update to the end of March showed a revenue increase of 9.4 per cent. Before services were withdrawn, revenue was up 17 per cent for the first two months of 2020, and National Express said it was receiving over 60 per cent of its pre-coronavirus revenue in the US and it expected to grow as a result of the government’s stimulus package. In the UK, the firm is still running its West Midlands bus network albeit at 46 per cent capacity and 80 per cent of its workforce has been furloughed on the government’s job retention scheme.

Chief Executive, Dean Finch said: “National Express went into this crisis with revenue up strongly across the Group. I remain confident that we will emerge out of this unprecedented period with our portfolio of strong assets ready to return to delivering industry-leading service to our customers.”

Since Finch took the helm in 2010, the coach operator has worked its way back to its pre-2009 position with debt slashed, a broader geographic customer base and greater profitability. While coronavirus will undoubtedly have an impact on National Express, the consensus seems to be that it can ride out the crisis. With operating margins in the upper eight per cent range, total liabilities that are under three times total equity and dividend yields averaging 3.7 per cent over the last five years, it might provide rewards for investors in the long-term.

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This research is produced by Accendo Markets Limited. Research produced and disseminated by Accendo Markets is classified as non-independent research, and is therefore a marketing communication. This investment research has not been prepared in accordance with legal requirements designed to promote its independence and it is not subject to the prohibition on dealing ahead of the dissemination of investment research. This research does not constitute a personal recommendation or offer to enter into a transaction or an investment, and is produced and distributed for information purposes only.


Accendo Markets considers opinions and information contained within the research to be valid when published, and gives no warranty as to the investments referred to in this material. The income from the investments referred to may go down as well as up, and investors may realise losses on investments. The past performance of a particular investment is not necessarily a guide to its future performance.

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