Company in the news: FirstGroup

FirstGroup (LSE: FGP)has had a year to forget. Its aggressive pitch for the West Coast rail franchise backfired and led to a £600m cash call to shareholders. In return they have seen their dividend payments scrapped and the value of their investment sink.

Activist shareholder Sandell reckons that FirstGroup should sell its Greyhound long-distance bus business in the US, list its school bus division and pay down debt. It says this would boost shares to 199p from around 118p now.

The management disagrees. Any potential bidders will probably be put off by £1.4bn of debt and a £220m hole in its pension fund. Can FirstGroup turn itself around?

MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

https://cdn.mos.cms.futurecdn.net/flexiimages/mw70aro6gl1676370748.jpg

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

At the moment too much of its profit continues to be eaten up by interest payments. Rivals Stagecoach (LSE: SGC) and National Express (LSE: NEX) still look like better homes for your money.

Verdict: avoid

Explore More

Phil spent 13 years as an investment analyst for both stockbroking and fund management companies.