Could Royal Mail PLC return to over 600p per share?

Post by **TrueBlueTerrier** » 22 Oct 2018, 13:50

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It’s been a tough few months for the Royal Mail PLC (LON:RMG) (RMG.L) share price. It has fallen from around 630p in May to its current level of around 345p.

Of course, during those 5/6 months, there has been a significant fall in the FTSE 100. The index has come under pressure as a result of fears surrounding the prospects for the world economy. The potential for a global trade war seems to be weighing on investor confidence, and this situation could persist over the near term in my view.

The Royal Mail share price has also been negatively impacted by a profit warning. The company believes that the cost avoidance and efficiency strategies being pursued may not have the impact that it had previously anticipated. As a result, it is now more cautious on its financial outlook over the medium term.

In my view, cost avoidance and efficiency measures can only do so much to improve the performance of any business. Ultimately, higher revenue is required to deliver sustainable growth, and falling volumes within the UK letters division is a trend which is showing little sign of slowing down.

That’s why I’m optimistic about the fact that the company is investing heavily in its international operations. They have been able to generate double-digit volume growth in recent quarters, and this could continue in future. International acquisitions could help to fuel the company’s long-term growth rate and may offset weaker performance from UK letters.

With a dividend yield of around 5.5%, I think that Royal Mail could offer good value for money at the moment. It may experience a period of uncertainty in the near term, and this may cause a further decline in its valuation. But in the long run I believe it could offer improving total returns due in part to its international growth strategy.

Celgar · Post by **Celgar** » 22 Oct 2018, 16:37

Maybe if we can acquire some competent people to run the business at the top then in the extreme long term it might get back to six pounds per share. I think we have hit the realisation now that the GDPR regulations, that were designed to hit internet companies that the unelected EU fascists despise, have damaged our business. If the UK can make clean break from the EU then the future for RM will be more promising.

elteleltel · Post by **elteleltel** » 22 Oct 2018, 21:42

Some on here reckon they will be under One Pound but I'm more optimistic and see around 4 Pounds in the near future. Every store closure is extra business and the High St is really suffering .Some of my regulars are receiving parcels daily and then DHL ,UPS or whoever turnup with more stuff .
Internet shopping will save RM imho, obviously I could be wrong ☺

Post by **wacko74** » 23 Oct 2018, 06:41

If the USO can be successfully revised then it could go well over £6.

Post by **westy23** » 23 Oct 2018, 11:04

I have been interested the stock market for the past 40 years and have done ok ish most of the time
But when it come to share price predictions just remember
(There’s those that don’t know and there’s those that don’t know they don’t know)

Celgar · Post by **Celgar** » 23 Oct 2018, 17:50

elteleltel wrote:Some on here reckon they will be under One Pound but I'm more optimistic and see around 4 Pounds in the near future. Every store closure is extra business and the High St is really suffering .Some of my regulars are receiving parcels daily and then DHL ,UPS or whoever turnup with more stuff .
Internet shopping will save RM imho, obviously I could be wrong ☺

I agree with you that that is the future. Do you not think that our Network is currently at full capacity though and we could not cope with any more business? Looking back at what happened last Christmas we were in a right state of affairs and a lot more Christmas cards were delivered in January than in previous years. RM are still attributing that mess to the weather which played some part but I think there were other reasons as well. RM are already preparing for a similar scenario this year with priority going to parcels.

Celgar · Post by **Celgar** » 23 Oct 2018, 17:55

wacko74 wrote:If the USO can be successfully revised then it could go well over £6.

I'm not sure RM will decide to take the route of relieving itself of the USO as they believe how we operate is one of our selling points to customers. If they do drop the USO it will mean masses of redundancies with a possible move to a five day operation, wage cuts, and some mail such as the letters being delivered every other day or less. In short the nuclear option.

mickeymacca · Post by **mickeymacca** » 23 Oct 2018, 19:22

Celgar wrote:
elteleltel wrote:Some on here reckon they will be under One Pound but I'm more optimistic and see around 4 Pounds in the near future. Every store closure is extra business and the High St is really suffering .Some of my regulars are receiving parcels daily and then DHL ,UPS or whoever turnup with more stuff .
Internet shopping will save RM imho, obviously I could be wrong ☺
I agree with you that that is the future. Do you not think that our Network is currently at full capacity though and we could not cope with any more business? Looking back at what happened last Christmas we were in a right state of affairs and a lot more Christmas cards were delivered in January than in previous years. RM are still attributing that mess to the weather which played some part but I think there were other reasons as well. RM are already preparing for a similar scenario this year with priority going to parcels.

Some relief for the High Street may arrive in the Autumn Budget next month, when it has been predicted that the Chancellor will be going after Amazon and Google, thus levelling the playing field. It remains to be seen though, and what effect it may have on spending patterns.

From an investors perspective I'd be encouraged by the Management's attempts to transform the business, and introduce new products. On the shop floor though we can all see the challenges that they face in implementing these new practices. I'm still in 2 minds about buying more shares at the moment, but I think its in the next few weeks that the results are out, could be interesting!

Post by **wacko74** » 24 Oct 2018, 05:05

Celgar wrote:
wacko74 wrote:If the USO can be successfully revised then it could go well over £6.
I'm not sure RM will decide to take the route of relieving itself of the USO as they believe how we operate is one of our selling points to customers. If they do drop the USO it will mean masses of redundancies with a possible move to a five day operation, wage cuts, and some mail such as the letters being delivered every other day or less. In short the nuclear option.

I'm not saying dropping the USO completely, that would be the nuclear option. (I'm not even sure if they can just opt out of it altogether anyway?) But just getting the current terms revised when it's next up for review.

Priority items could still be delivered 6 days a week (Even possibly extending to 7 days a week) but yes a 5 day service for other general mail would have massive cost savings with a resultant boost to the SP.

And as for the ''threat'' of redundancies... well I'd stand well clear if I were you or you're likely to be trampled in the stampede of those willing to take even a basic package.

Post by **Navalron** » 05 Nov 2018, 10:12

So then wako you could sit at home, unemployed, watching your share price to up. You make pennies while the super rich get, eh, richer. Anybody who works in RM and contemplate the DOWNGRADING or removal of the universal service order needs their heads examining. Every bullshit wages and conditions parcels companies out there, which is most of them, would hoover up RM work and the few RM staff left would soon be signing on for £73 per week..