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Amongst individual stocks, some of the worst performers have been large integrated groups, running various different types of transport. For example Stagecoach (LSE: SGC) has dropped 64%, Arriva (LSE: ARI) is down 44%, Go-Ahead (LSE: GOG) has dropped behind by 40% and National Express (LSE: NEX) is about 24% off the rails.
Private vs Public
The smaller, leaner concerns have tended to perform better. In particular logistics companies, such as Tibbett & Britten (LSE: TBG) and Christian Salvesen (LSE: SVC), or specialised suppliers, like Autologic (LSE: ALG) and Trafficmaster (LSE: TFC), have had a good year. All these four have risen in value by more than a quarter.
The factor these successful companies have in common is that they only have to deal with private companies. Most of the worst affected transport groups are those with contracts to provide public transport services. Threats of excessive Government interference in and regulation of their activities has scared off investors.
Bucking the trend
The one public transport company to buck this depressing trend is Prism Rail (LSE: PIM). This company operates four lucrative rail franchises: LTS Rail, which includes the 'misery line' between Southend and London Fenchurch Street; Wales & West; WAGN Railway, which runs out of Kings Cross and Liverpool Street to Stansted Airport and other East Anglian destinations; and Valley Lines around Cardiff.
In the year to the end of March, Prism's profits before tax still rose 16% to £11.4m on sales up 4% to £481m despite a continuing fall in Government subsidy. The company is therefore run pretty efficiently. In the three months since then the shares have risen by more than a half. This is partly because of the good results, partly because of the hope of increased Government support for the sector but mainly because Prism was viewed as a takeover target.
All change please!
Today Prism's shares have raced ahead a further 72.5p, or 14%, to 585p as the long-expected bid has emerged. National Express (LSE: NEX) has made an agreed 615p a share offer, which values the group at £166m. Prism shareholders will receive 0.375 of a new National Express share and 282.5p in cash as well as a special dividend of 40p.
The deal should enhance National Express's rail interests and hence earnings significantly, although some commentators on the company's discussion board disagree. The group still trades on a lowly PER of 13. This was as low as 8 at one stage this year though. The combined entity will also have the financial firepower to bid successfully for the next round of rail franchises, which are likely to be re-organised and sold soon.
All aboard?
National Express sees further organic growth from Prism as well, envisaging a 50% increase in passenger numbers over the next decade. The takeover makes the group the largest public rail company in the country, controlling both the heavily used and extremely profitable Gatwick and Stansted Expresses. As well as these jewels in its crown, the group also has an extensive bus and coach network. It also recently acquired a leading US schoolbus franchise.
So if you believe the Government's plans to invest heavily in public transport via subsidy in an effort to get people off the roads, then National Express might offer as good a ride as many companies in this sector. Others, such as Stagecoach or Arriva might offer a cheaper PER but National Express seems to hold out slightly greater growth prospects at present.
Where Next?
Have your say on the Fool's Eye View discussion board, via the resources section below.
• Take a ride on National Express's discussion board
• Jump on the busier Stagecoach discussion board
• Peek at this Fool's Eye View on National Express's final results: "An unexciting journey ahead"
• Turn to this Transport sector dissector: "On the move"