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Go-Ahead share price: 4 things to watch out for in its Q3 results

The British public transport provider has made significant progress with its three-pronged growth strategy so far this year, with investors eager for an update this week on its performance.

Go-Ahead Group recorded a strong start to 2019, with the company’s share price climbing more than 35% between January to late-February, though in the months that have followed its stock has slid more than 10% and trading at £18.31 levels as of Monday 11:45am.

In a bid to strengthen and stabilise its share price the British public transport provider has embarked on a three-pronged approach to driving growth at the company, with investors eager for an update on its performance when its releases its third quarter (Q3) results on Thursday.

Go-Ahead making ‘good progress’ with three-pronged growth strategy

In its half-year results that the company published back in February, Go-Ahead had made good progress across all three of its strategic pillars, which sees the business focusing on growing its core business, while winning new bus and rail contracts, as well as investing in the future of transport.

‘I’m pleased to report that our half year results are ahead of our expectations,’ Go-Ahead Group CEO David Brown said.

Go-Ahead full-year guidance upgraded

Go-Ahead Group’s strong first half results came in above expectations, with the company’s rail business pulling its profits up over the first six months of trading.

In fact, rail operating profit came in at £17.6m ahead of expectations, though lower than last year due to the end of the London Midland franchise in December 2017. The strength of its rail business this year allowed the company to upgrade its full-year guidance.

International growth on track

Go-Ahead has also taken significant strides forward with its international expansion plans, with the company landing three additional contracts outside of the UK.

The company managed to secure rail contracts in Norway and Germany, with Go-Ahead also winning a consultancy contract in Australia.

Overall, annualised revenue from the 10 international contracts secured to date is expected to be over £400 million, with Go-Ahead boasting a strong pipeline in its target markets.

The business remains on track to deliver 15%-20% of group operating profit from international operations by 2022.

Go-Ahead invests for the future

Go-Ahead plans to stay in front of its rivals by investing in its future and the ever-changing demands of customers. PickMeUp, the group’s new demand responsive transport operation based in Oxford, has seen its user numbers increase by 20,000 and is currently providing 3,000 weekly rides.

Meanwhile, the company’s Billion Journey Project incubator is creating opportunities with start-ups, with two pilots already underway and more to come down the line. By investing domestically, internationally and within the technology space, Go-Ahead is expecting to deliver a strong set of results in 2019, with

free cash flow generation forecast to be strong, helping the business reduce its net debt and support the payment of dividends for its shareholders.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

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