Explain National Express Group and its grow
Introduction
National Express Group plc (Nex in UK and Nex L in US) is a UK based multinational
public transport organization. The company operates several modes of transportation services
including buses, trains, coach and tram services in US, UK, Canada, Spain, Morocco, Malta
and Portugal. The company forms part of FTSE 250 Index and its listed as NEX in LSE. The
market capitalization for National Express in 2015 amounted to £1.15 billion while the share
prices increased to £225.23 per share. The total revenues for National Express in the year
2015 was £1,919.8 million while the operating income amounted to £193.5 million and a net
income £109.1 in the first quarter (National Express, 2011).
The Go –Ahead group plc is a British transport company that is based in Newcastle upon
Tyne and serves several countries including Germany, Singapore and United Kingdom. It
provides Bus and rail services and trades in LSE under the ticker names GOG. It has a total
market capitalization of £1.12B and the company’s shares are now selling at 2,607.
The profitability ratio for National Express Group Plc shows that the company is performing
well. The gross profit margin for the group in the year 2015 was 10% in 2015 while the year
2014 registered the lowest Gross profit ratio at 9% compared to 12% in 2012.
The profitability ratio for the Go-Ahead Plc shows that the company is performing below
average. The gross profit margin for the group in the year 2015 was 4% in 2015 while the
year 2013 registered the lowest Gross profit ratio at 3% compared to 5% in 2012 (Go-Ahead
Group plc, 2011: Yahoo Finance, n,d).
The liquidity ratios for national express are also very encouraging. The current ratio for
2015and 2014 ha s been 3.57: 1 and 4.11:1 while the quick ratio for the same period
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amounted to 3.53:1 and 4.07:1 for the current and quick ratios respectively while the
liquidity ratios for the go-Ahead are also not very encouraging. The current ratio for 2015and
2014 ha s been 1.01: 1 and 0.98:1 while the quick ratio for the same period amounted to
0.99:1 and 0.95:1 for the current and quick ratios respectively.
The efficiency ratios like the inventory turnover for National Express showed that the
inventory turns were relatively high hence the company is performing well as the stock turns
are over 77 times while the inventory turnover for the Go-Ahead Group showed that the
inventory turns were relatively low hence the company is performing below average as the
stock turns are less than 1 (Go-Ahead Group plc, 2012).
The solvency ratios for NEX shows that the debt that the company has acquired is still more
than 67% while the times interest earned was highest at 3.38 times in 2015.The debt is
slightly higher than 50% of the total assets while the solvency ratios for GOG shows that the
debt that the company has acquired is still more than 94% of the total assets while the times
interest earned was highest at 6.35 times in 2015.The debt is almost the same as the total
value of the assets.
2). The trend analysis for National Express Groups shows that the company’s profitability is
decreasing marginally. Since the year 2011, the highest growth trend was realized in the year
2012 where the company’s profit margin on sales grew by 15.06% from the previous year but
besides the year 2015 where the Gross Profit Margin grew by 12.29% the rest of the years the
company has experienced negative growth trend apart from the year 2011 where it grew by
4.76% while the trend analysis for the Go-Ahead Groups shows that the company’s
profitability is increasing marginally. Since the year 2011, the lowest growth trend was
realized in the year 2013 where the company’s profit margin on sales decreased by 40% from
the previous year. The years 2015 and 2014 the Gross Profit Margin grew by 33.33% while in
Accounts 2 4
2012 the Gross profit grew by 25%. Compared to National Express, the financial profitability
growth trends for Go-Ahead Group were much favourable.
GOG’s liquidity experienced the worst growth period in 2013 only when the company
registered a decrease in liquidity of 1.03% while the other years registered positive trends.
The liquidity growth rates of GOG are much higher and better than those of NEX as the
company (NEX) experienced the worst growth period in 2014 and 2015 when the company
registered a decrease in liquidity of 13.24% and 13.19% compared to the previous periods
GOG’s solvency status remained firm as the company registered improved growth of 50% in
times interest earned and no increase in growth for the debt asset ratio in 2015 while NEX’s
solvency status also remained firm as the company registered improved growth of 27.36% in
times interest earned and 3.84 increase in growth for the debt asset ratio.
The NEX’s Return on Equity has also experienced a positive growth trend but the growth
was not steady. The return on assets growth trend registered the highest growth in 2015 when
it grew by 81.36% compared to the year 2014.
GOG’s Return on Equity has also registered the worst growth trend in all its financial growth
records. The ROE registered 41.83% decrease in its ROE in the year 2015 while the year
2014 registered a decrease of 1.92%. The return on assets growth trend registered the highest
growth in 2014 when the ROA grew by 40% compared to the year 2013 that registered a
reduction of 16.67%. The year 2015 registered the worst growth trend in ROA in all years
when it experienced a decrease in ROA growth trend of 41.83%.
To conclude, National Express Group financial performance is better in terms of profitability,
returns to assets, solvency and liquidity ratios but the Go-Ahead Group is much stable and
Accounts 2 5
has showed consistency in its growth trends and which are more superior to those of National
Express.
Accounts 2 6
References
Yahoo. Finance (n, d) National Express Group
