Two FTSE Stocks Under the Spotlight: VMUK and RMG

Virgin Money UK PLC

Virgin Money UK PLC (VMUK) is a provider of individual and business banking and related financial services. It operates through Clydesdale Bank, Virgin Money, Yorkshire Bank, and B Brands. The organisation offers a variety of accounts and deposit services; credit and check cards; advances and home loans; life and general insurance; corporate financing; treasury arrangements; Forex-related services; and digital banking arrangements. It provides investment and post-retirement benefits, wealth management, and private banking arrangements.

VMUK-Recent News

On 31^st October 2019, in a press release, the company announced it change of name to Virgin Money UK PLC. The company was earlier known as CYBG Plc. The company will announce its full-year results on 28th November 2019.

VMUK-Q3 FY19 Trading Update

In Q3 FY19, mortgage book declined by 0.2 per cent to £60.4 billion as compared with the corresponding period of the last year, driven by the decrease in new business volumes and an increase in the redemptions in the existing quarter. Business lending surged by 0.5 per cent to £7.7 billion in Q3 FY19, driven by the lower volumes from new business in the subdued market. In Q4 FY19, the group had a robust pipeline of new lending. Personal lending rose by 5.7 per cent to £4.8 billion, due to the progress in the credit card division. Customer deposit rose by 1.8 per cent to £62.8 billion, due to a surge in deposit progress in Business and Personal divisions. The group’s integration programme is well-positioned with a delivery £45 million of cost synergies rate annually. In October 2019, the company stayed on track for completion of FSMA Part VII.

VMUK-Financial Highlights for H1 FY19

(Source: Company’s website, Interim results)

For the first half of 2019, the company’s net interest income rose to £820 million in H1 FY2019 as compared with the corresponding period of the last year, driven by a substantial surge in the interest income for the existing period. In H1 FY19, the reported total operating income surged by £423 million to £926 million as compared to £503 million in H1 FY2018. The group’s pre-tax profit was £42 million in H1 FY2019 against a loss of 95 million in H1 FY2018. The Basic and diluted earnings per share stood at 0.2 pence in H1 FY19 as compared to a loss per share of 10.2 pence in H1 FY2018.

In Q3 and H1 FY19, the company had shown good progress in financial performance. During the third quarter of 2019, the company’s lending business performed well, and as a part of the integration programme, the company has provided a £45 million of cost synergies rate annually.

By the end of 2022, the group is also targeting to bring operating costs lower than £780 million and cost-to-income ratio to the mid-40 per cent. This move will permit the lender to reshape their balance sheet and shift emphasis to expand exposure in the high margin assets and lower-cost deposits. This strategy will also help them to simplify the business through digitising and would improve incremental cost efficiencies.

VMUK-Share price performance

Daily Chart as at 15-November-19, after the market closed (Source: Thomson Reuters)

On 15th November 2019, Virgin Money UK PLC shares closed at GBX 140.95 per share; which was less by 0.424 per cent in comparison to the last traded price of the previous day. The company’s market capitalisation was at £2.02 billion at the time of writing.

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On 15th November 2018, the shares of VMUK have touched a new peak of GBX 274.40 and reached the lowest price level of GBX 102.25 on 8th October 2019 in the last 52 weeks.

The stock’s traded volume was hovering around 3,457,981 at the time of writing before the market close. The company’s 5-day stock's daily average traded volume was 2,057,398.00; 30 days daily average traded volume- 3,581,168.83- and 90-days daily average traded volume – 3,729,693.70. The volatility of the company’s stock was 4 per cent higher as compared with the index taken as the benchmark, as the beta of the company’s stock was recorded at 1.04 with a dividend yield of 2.19 per cent.

The shares of the company have delivered a positive return of 3.10 per cent in the last quarter. The company’s stock plunged by 22.21 per cent from the start of the year to till date. The company’s stock has given investors 46.40 per cent of a negative return in the last year.Â

Royal Mail Group Plc

Royal Mail Group Plc (RMG) is an Industrial Transportation organisation having activities internationally. The organisation has its footprint in around 44 nations around the world. The organisation is having a representative base of 160,000 plus individuals and it transports 1.8 billion- plus bundles and 14 billion plus letters every year. The organisation's activities can be segregated into 2 businesses, namely, General Logistics Systems (GLS) and UK Operations. In the United Kingdom, the organisation works under Parcelforce Worldwide and Royal Mail brands. The organisation is focusing on an extension outside Europe through acquisitions.

RMG-Recent News

On 13^th November 2019, the High court ruled that the employees’ industrial action is unlawful. This signifies that no industrial action can be taken before the completion of a lawful ballot.

Earlier in October this year, the company was very disappointed that the CWU (Communication Workers Union) has chosen to ballot for industrial action on 15th October 2019. CWU had announced that, of the CWU members in Royal Mail who voted, 97.1% voted in favour of taking industrial action.

On 21st November 2019, the company will announce the financial results for the half-year ending 29th September 2019.

RMG-Financial Highlights for FY19

(Source: LSE)

In the financial year ending 31st March 2019 (53 weeks), the company’s revenue surged by 2.00 per cent to £10,581 million as compared with the financial year 2018 of £10,172 million, driven by the high revenue from parcels in the UKPIL and the impact of the 53rd week in UKPIL segment and GLS segments. The company’s EBIT (earnings before interest and taxation) stood at £175 million against the £137 million in FY2018. The profit for the year 2019 decreased by 32.17 per cent to £175 million in FY2019 as compared with the financial year 2018 of £258 million. In 2019, the group’s reported basic earnings per share were 17.5 pence against the 25.9 pence in FY2018. The company’s proposed full-year dividend per share stood at 25 pence, an increase of 1pence from the previous year data.

RMG-Share price performance

Daily Chart as at 15-November-19, after the market closed (Source: Thomson Reuters)

On 15th November 2019, Royal Mail Group Plc shares closed at GBX 232.10 per share; which was more by 2.69 per cent in comparison to the last traded price of the previous day. The company’s market capitalisation was at £2.32 billion at the time of writing.

On 15^th November 2018, the shares of RMG have touched a new peak of GBX 355.55 and reached the lowest price level of GBX 186.80 on 15th August 2019 in the last 52 weeks.

The stock’s traded volume was hovering around 3,026,578 at the time of writing before the market close. The company’s 5-day stock's daily average traded volume was 4,074,298.40; 30 days daily average traded volume- 3,989,426.87- and 90-days daily average traded volume – 4,501,672.80. The volatility of the company’s stock was 30 per cent lower as compared with the index taken as the benchmark, as the beta of the company’s stock was recorded at 0.70 with a dividend yield of 11.06 per cent.

The shares of the company have delivered a positive return of 20.41 per cent in the last quarter. The company’s stock plunged by 14.70 per cent from the start of the year to till date. The company’s stock has given investors 28.6 per cent of a negative return in the last year.Â