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FGP: Dividend And Buyback Will Support Stronger Shareholder Returns Ahead

Bus Electrification And London-Stirling Rail Route Will Improve Future Operations

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FGP
AnalystConsensusTarget
Not Invested
Published 08 Feb 2025

Update shared on 14 Dec 2025

Fair value Increased 4.71%
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Analysts have nudged their price target on FirstGroup higher, lifting fair value from £2.39 to £2.50 as they factor in slightly improved revenue expectations despite a modestly softer margin and higher discount rate.

What's in the News

  • Board proposes an interim dividend of 2.2 pence per share for H1 2026, up from 1.7 pence in H1 2025. This implies a payment of about £12 million in line with its three times adjusted EPS cover policy (company announcement).
  • Completion of a £50 million share buyback, with 22,439,652 shares repurchased between June 10 and October 3, 2025. This is equivalent to approximately 3.97% of issued share capital (company announcement).

Valuation Changes

  • Fair Value: Raised slightly from £2.39 to £2.50 per share. This reflects modestly better top line expectations.
  • Discount Rate: Increased marginally from 11.57% to 11.87%, which tempers some of the uplift from higher fair value drivers.
  • Revenue Growth: Assumed contraction has eased, with the forecast improving from approximately -28.8% to -25.2%.
  • Net Profit Margin: Reduced from about 6.31% to 5.53%, indicating expectations for somewhat weaker profitability.
  • Future P/E: Edged higher from 13.4x to 14.6x, which implies a slightly richer valuation multiple on forward earnings.

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Disclaimer

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