FirstGroup shares up over 6% after sales beat

FirstGroup PLC (FGP.L) shares rose more than 6% following the company’s announcement of a full-year profit beat and a new £50 million share buyback program. The UK-based transport operator reported adjusted earnings per share of 19.3 pence, exceeding the company-compiled consensus of 18.9 pence. The strong performance was driven by its First Bus division, which reported revenue of £1.08 billion, ahead of expectations of £1.05 billion.

The company also raised its dividend by 18% to 6.5 pence per share and announced plans to expand its rail operations, including securing track access rights for new open access routes between London and South Wales and London and Stirling. CEO Graham Sutherland highlighted the company’s intent to participate in upcoming UK government transport projects, which include a £15.6 billion spending review aimed at improving infrastructure outside London.

Despite the nationalization of its South Western Railway unit in May, which is expected to impact fiscal 2026 revenue, FirstGroup remains optimistic about growth in its bus and open access rail operations. The company also reported adjusted net debt of £86.9 million, below market consensus, and increased capital investment to £389.9 million, focusing on fleet electrification and acquisitions.

Analysts at RBC Capital Markets raised their price target for FirstGroup to 220 pence, citing strong earnings and balance sheet performance. The stock currently trades at 216.40 pence, with a forward P/E ratio of 886.03 and a dividend yield of 3.00%.