Friday 4 October 2013

Royal Mail - First Class?

When I first heard about the Royal Mail flotation I must say I wasn't that interested. The company faces its fair share of adversity, with issues ranging from the rise of the email, strong competition in parcel delivery, and also employee turmoil. Things won't be easy going forward and some serious restructuring is probably in order.

However the figures are very appealing. The price range cited at initial offering is 260-330p, which would put their PE ratio at around a very reasonable 10. Also the dividend is forecast to be 6-7%, a phenomenal income stream in times of ultra low savings rates.

In 2012 the business made a decent pre-tax profit of £201m, a huge improvement over the -£118m loss in 2011, this probably due to the huge increase in the price of stamps etc. The figures for 2013 look like they will be even better!

There is huge public interest in this flotation, personal anecdotal evidence points to the shares hitting the higher end of the 260-330p range. I won't be getting involved in the initial offering but I will be keeping a close eye on them.


1 comment:

  1. They are really popular. People around rely on them a lot. I am a regular user of their service.