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Stagecoach Continues to Steam Ahead

Wednesday - 12/5/2012, 1:07pm  ET

Shares in Stagecoach Group  rallied 2.3%, or 6.70 pence, to 298.30 pence in early morning trade, as the bus and rail operator issued its interim results.

The owner of East Midland Trains and the budget coach brand megabus.com, among others, reported a 5.9% increase in group like-for-like revenue, up to £1,403.3 million from £1,293.7 million in 2011. Elsewhere, pre-tax profits leaped to £123.7 million from £88.7 million at the same stage last year, with total operating profit climbing 33% to £142 million compared to £106.2 million at H1 2011.

Management pinpointed "strong partnerships" as supplying growth across the board, with a further development of the alliance between South West Trains and Network Rail, as well as "successful fares strategy" delivering further revenue in its U.K. regional bus operations.

Stagecoach chief executive Sir Brian Souter commented:

In the U.K., we have achieved further growth in our regional bus operations and we continue to make good progress at our contracted London bus business. Passenger revenue growth remains good on our U.K. rail networks.

In North America, we are pleased with the performance of the businesses acquired in the summer from Coach America. Our budget coach brand, megabus.com, continues to expand to new regions and we now offer low-cost travel to customers in around 120 locations in the United States and Canada.

We see good potential ahead to grow our transport operations in the U.K. and North America, and we believe the outlook is positive. We are closely focused on the commercial opportunities from our investment in new technology, such as smartcards, digital marketing and social media. These developments are helping customers by making it easier to travel, easier to buy, and easier to get information. Innovation, value for money and strong operational delivery are also key elements of our ongoing program to drive organic growth and we are making targeted acquisitions where these can add value to the Group.

Meanwhile, private investors will be boosted by the headline figure of a 66.3% increase in earnings per share, which now stands at 16.8 pence against 2011's 10.1 pence. Additionally, the interim dividend per share has risen 8.3% to 2.6 pence from 2.4 pence last year.

A rosy picture was painted for the future, too, with a "relatively modest" revenue growth expected for the second half, as well as plans to engage with the British government to help deliver "a better rail franchising model for passengers, taxpayers and investors."

Having previously hit a five-year low of 106 pence back in 2009, Stagecoach now represents a near-300% gain for canny investors who bought into the company when it was most unloved by the market in the depths of the financial crisis.

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This article was originally published as Stagecoach Continues to Steam Aheadon Fool.com

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