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1. Company Snapshot

1.a. Company Description

FirstGroup plc provides public transport services in the United Kingdom and the United States.The company operates through First Bus and First Rail segments.The First Bus segment offers local bus services with a fleet of approximately 4,900 buses in the United Kingdom.


The First Rail segment operates a passenger rail network that provides long-distance, commuter, regional, and sleeper services through a portfolio of Great Western Railway, South Western Railway, TransPennine Express, and Avanti West Coast franchises; passenger rail services; and hull trains and Lumos.FirstGroup plc was founded in 1986 and is based in London, the United Kingdom.

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1.b. Last Insights on FGP

FirstGroup plc faces challenges, with its recent performance impacted by a decline in underlying operating profits. The company's earnings fell by 12.7% to £59.9 million for the six months to June 30, worse than expected. This decrease likely contributed to investor concerns. Additionally, the company's fundamentals, although strong, may not be reflected in its current stock value, potentially leading to market skepticism. Recent reports question whether the market is underestimating the company's prospects.

1.c. Company Highlights

2. FirstGroup's Strong H1 Results Driven by Growth in First Bus and Rail Services

FirstGroup reported a robust first half, with adjusted revenue increasing by 30% to £834 million, largely driven by the acquisition of First Bus London. Adjusted earnings per share (EPS) rose by 16% to 9.9p, supported by earnings growth in open access and rail services, as well as cost efficiencies. The group's adjusted operating profit margin was 12.4%, with adjusted operating profit reaching £103.6 million. The actual EPS came in at 0.08753, beating analyst estimates of 0.085. The Board proposed an interim dividend of 2.2p per share, up 29% against the prior year.

Publication Date: Nov -30

📋 Highlights
  • Revenue Surge: Adjusted revenue jumped 30% to £834m, fueled by First Bus London acquisition and open access rail growth.
  • Profit & EPS Growth: Adjusted operating profit rose 2.8% to £103.6m; EPS gained 16.5% to 9.9p, driven by cost efficiencies and rail/service restructuring.
  • Capital Allocation: Generated £223.7m operating cash, invested £126.5m in CapEx (including Hitachi JV), ending with £207.6m net debt and 0.95x debt cover.
  • Rail Performance: Open access rail (Hull Trains, Lumo) posted £16.3m profit, though down YoY due to industrial action and new service costs.
  • Electrification Push: £30m allocated for London EV trials, aiming to capture £7m+ efficiency savings via electrification and fuel cost reductions.

Segmental Performance

First Bus delivered a solid half year, with operating profit growth of 4%, driven by yield management, cost efficiencies, and recent acquisitions. However, the transition to a £3 fare cap in England resulted in lower funding levels. The group's open access rail operations, Hull Trains and Lumo, reported adjusted operating profit of £16.3 million, lower than the prior year due to industrial action and mobilization costs for the new Stirling to London service.

Cash Flow and Capital Expenditure

The group generated £223.7 million of capital from operations and deployed £126.5 million in CapEx, net of grant funding and battery sales. The business generated £78.3 million in cash, despite accelerated investment in bus electrification. The group's adjusted net debt stood at £207.6 million, with a debt cover ratio of 0.95x.

Outlook and Valuation

FirstGroup expects to deliver modest growth in adjusted EPS for full year 2026 and maintain this level into full year 2027. The bus business anticipates making sequential operating profit progress year-on-year, driven by acquisitions and cost efficiencies. With a current P/E ratio of 8.18 and an EV/EBITDA ratio of 3.49, the market appears to have factored in some of the group's growth prospects. The dividend yield of 3.96% is also attractive, given the group's commitment to returning capital to shareholders.

Return on Investment and Debt Metrics

The group's ROIC stands at 6.54%, indicating a reasonable return on invested capital. The Net Debt / EBITDA ratio is 1.92, suggesting a manageable debt burden. With a strong pipeline of opportunities in bus franchising and a focus on electrification, FirstGroup is well-positioned to drive growth and create value for shareholders.

3. NewsRoom

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Insider Action On Global Undervalued Small Caps For November 2025

Nov -27

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There's A Lot To Like About FirstGroup's (LON:FGP) Upcoming UK£0.022 Dividend

Nov -23

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FirstGroup (LON:FGP) Has Announced A Dividend Of £0.022

Nov -21

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FirstGroup PLC (FGROY) (Half Year 2026) Earnings Call Highlights: Strong Revenue Growth and ...

Nov -20

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FirstGroup plc's (LON:FGP) Fundamentals Look Pretty Strong: Could The Market Be Wrong About The Stock?

Nov -18

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FirstGroup plc (LON:FGP) Shares Could Be 23% Above Their Intrinsic Value Estimate

Oct -16

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Taylor Wimpey (LSE:TW.): A Fresh Look at Valuation After a Year of Share Price Pressure

Sep -09

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Assessing Diageo (LSE:DGE) Shares: Is the Current Valuation a Missed Opportunity?

Sep -09

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.83%)

6. Segments

First Rail

Expected Growth: 4.83%

First Rail's 4.83% growth is driven by increasing passenger numbers, fare hikes, and contract wins. Strong demand for commuter services, particularly in the UK, contributes to revenue growth. Additionally, the company's focus on cost savings initiatives and investments in digital transformation also support profitability.

First Bus

Expected Growth: 4.83%

First Bus's 4.83% growth is driven by increasing passenger demand, fare hikes, and operational efficiencies. Strong marketing efforts, improved customer experience, and investments in digitalization also contribute to growth. Additionally, the company's focus on cost reduction, fleet modernization, and expansion into new markets further support revenue growth.

Intra-group Elimination

Expected Growth: 4.83%

FirstGroup plc's 4.83% intra-group elimination growth is driven by efficient cost management, synergies from acquisitions, and improved operational performance. The company's focus on reducing overhead costs, streamlining operations, and leveraging economies of scale has led to increased profitability. Additionally, strategic divestments and investments in growth areas have contributed to the elimination of non-core activities, further enhancing the company's financial performance.

7. Detailed Products

First Bus

FirstGroup's bus division operates bus services in over 40 towns and cities across the UK, providing transportation to millions of passengers every year.

First Rail

FirstGroup's rail division operates several rail franchises in the UK, including Great Western Railway, South Western Railway, and TransPennine Express.

First Transit

FirstGroup's transit division provides public transportation services in North America, operating bus and rail services in several US states and Canadian provinces.

Greyhound

Greyhound is a leading intercity bus service in North America, operating a network of routes across the US and Canada.

BoltBus

BoltBus is a budget-friendly intercity bus service operating in the US, offering affordable fares and convenient routes.

Greyhound Package Express

Greyhound Package Express is a package delivery service that uses Greyhound's bus network to transport packages across North America.

8. FirstGroup plc's Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for FirstGroup plc is medium due to the presence of alternative modes of transportation such as personal vehicles, bicycles, and walking. However, the convenience and affordability of public transportation provided by FirstGroup plc reduce the likelihood of customers switching to substitutes.

Bargaining Power Of Customers

The bargaining power of customers is low due to the lack of alternative public transportation options in many areas, giving FirstGroup plc a degree of pricing power.

Bargaining Power Of Suppliers

The bargaining power of suppliers is medium due to the presence of multiple suppliers of buses, fuel, and other inputs. However, the large scale of FirstGroup plc's operations gives it some bargaining power in negotiating prices with suppliers.

Threat Of New Entrants

The threat of new entrants is low due to the high barriers to entry in the public transportation industry, including the need for significant capital investment and regulatory approvals.

Intensity Of Rivalry

The intensity of rivalry is high due to the presence of multiple competitors in the public transportation industry, including national and local operators, leading to intense competition for market share.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 69.48%
Debt Cost 3.95%
Equity Weight 30.52%
Equity Cost 11.03%
WACC 6.11%
Leverage 227.70%

11. Quality Control: FirstGroup plc passed 1 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
FNM

A-Score: 6.8/10

Value: 9.8

Growth: 8.0

Quality: 5.2

Yield: 5.6

Momentum: 6.0

Volatility: 6.0

1-Year Total Return ->

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Stock-Card
FirstGroup

A-Score: 6.6/10

Value: 8.8

Growth: 7.1

Quality: 3.7

Yield: 4.4

Momentum: 9.5

Volatility: 6.3

1-Year Total Return ->

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Jungfraubahn

A-Score: 6.3/10

Value: 3.1

Growth: 6.8

Quality: 6.9

Yield: 3.1

Momentum: 8.0

Volatility: 9.7

1-Year Total Return ->

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BVZ Holding

A-Score: 6.0/10

Value: 7.6

Growth: 5.7

Quality: 4.2

Yield: 1.9

Momentum: 8.0

Volatility: 8.7

1-Year Total Return ->

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Vossloh

A-Score: 5.4/10

Value: 3.4

Growth: 6.6

Quality: 5.5

Yield: 3.8

Momentum: 9.5

Volatility: 3.7

1-Year Total Return ->

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Talgo

A-Score: 3.6/10

Value: 8.4

Growth: 1.6

Quality: 2.8

Yield: 1.2

Momentum: 1.5

Volatility: 6.3

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

1.77$

Current Price

1.77$

Potential

-0.00%

Expected Cash-Flows