The Go-Ahead share price keeps falling! Should I buy this UK share today?

The Go-Ahead share price continues to struggle despite the release of upbeat financials. Here’s what I’m doing about this unloved UK share.

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The Go-Ahead Group (LSE: GOG) share price has been locked in a downslope in recent weeks. The UK transport share is still up 20% over the past year and a long way above November’s near-two-decade lows around 580p. But it’s falling again as rising Covid-19 infection rates in Britain have relit concerns over whether it can keep its buses and trains working.

Not even the release of bright financials on Thursday helped the Go-Ahead share price spring out of this downtrend. It rose fractionally to close the session a shade below £12.

Passenger numbers climb

In a trading update for the financial year to July 3 Go-Ahead said it has enjoyed “robust trading performance” across all of its divisions. Passenger numbers at its Regional Bus division are at their highest since the Covid-19 outbreak in early 2020. They are currently running at between 65% and 70% of pre-pandemic levels.

Go-Ahead said that the high number of people using its regional bus services since Covid-19 restrictions began easing reflects “the pent-up demand for leisure, retail and general social contact”. It added that traveller volumes are in excess of 80% of usual levels in some regions.

Strength elsewhere

In other news, Go-Ahead increased its full-year expectations for the London & International bus division. The unit will benefit from a one-off payment linked to Quality Incentive Contract agreements in London, the company said, while lower-than-forecast levels of sickness and expectations-beating staff retention levels have also boosted performance. Elsewhere, its Singaporean business will benefit from Covid-19-related government receipts.

Elsewhere, Go-Ahead said discussions regarding its Southeastern and GTR rail franchises have begun with the Department for Transport. News on contracts that are due to end this year is expected in the autumn. Go-Ahead said that it still predicts its Rail division will break even during this outgoing year.

The transport operator added that its balance sheet is strong and that cash generation is ahead of previous forecasts. It now expects leverage “to be towards the bottom end of the 1.5 to 2.5 times target range”.

Time to buy Go-Ahead?

Go-Ahead commented that “our priority over the coming months is helping passengers return to our services and welcoming new passengers who may be looking for a greener, value-for-money travel choice”. It added that the board continues to work towards paying a dividend “at an appropriate level” for financial 2021.

There’s clearly a lot of uncertainty facing Go-Ahead in the near term and beyond. Resurgent coronavirus cases in the UK are one problem, while the future for its rail franchises is a more enduring thorn in the side. The small-cap provides essential services for many people across the world, though. And this could still deliver big returns in the years ahead. But I won’t be buying Go-Ahead for my investment portfolio as the risks are far too high for my liking.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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