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Ofcom Accuses Royal Mail Group Plc Of Missing Postal Targets

The shares of Royal Mail (LSE: RMG) dropped 2% to 534p this morning after the newly listed package-delivery firm was blasted by regulator Ofcom for missing performance targets.

Royal Mail marginally missed its 93% target for next-day delivery of first-class letters, managing only 91.7%.

In a statement, Ofcom added:

“Ofcom is concerned about Royal Mail’s failure to meet certain service targets, and has made clear to the company that it must take all necessary steps to meet these in future… Should it miss the targets in future, Ofcom will consider opening a formal investigation which could result in enforcement action, including the possibility of fines”

Royal Mail responded apologetically, outlining its disappointment at missing these targets. However, the firm was quick to add that its service has the highest standards in Europe, and that 86% of Royal Mail customers are satisfied with its service.

With a market cap of £5.4bn, Royal Mail is valued at 13 times its forward earnings, and offers a prospective dividend yield of 3.7%.

Of course, whether that valuation, today’s news and the prospects for the parcel industry combine to make Royal Mail a ‘buy’, is something only you can decide.

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> Mark owns no shares mentioned in this article.