Investor appetite for UK shares has picked up fractionally in mid-week trade. The FTSE 100 was last up a little, for instance, and back through 6,700 points as trader confidence steadied. But general buying interest remains constrained by the ongoing Covid-19 crisis. Wincanton’s (LSE: WIN) share price, by contrast, has rocketed on Wednesday following the release of fresh trading details.
At 307p the logistics giant is trading at its most expensive levels since the same point last January. Here’s why this UK share has soared 13% from last night’s close.
Profits to beat forecasts
Wincanton — which provides logistics and supply chain services — said it had returned to sales growth in the final three months of 2020.
The small-cap business has “seen a continued improvement in revenues and profitability since the initial impact of Covid-19 early in 2020”. Because of this, it saw group sales rising 10% year-on-year in its third fiscal quarter following recovery and stabilisation in prior months.
This strong trading led Wincanton to predict that full-year profits for the current fiscal period (to March 2021) will come in “materially” ahead of expectations. This is on the proviso that the business doesn’t endure any “unforeseen severe Covid-19 impact in the closing months of the year,” it said.
Incidentally, it also said current coronavirus lockdowns aren’t expected to have a “significant” impact on its trading performance.
Wincanton reports broad-based growth
The company enjoyed revenues growth across all four core segments. And the business reported its strongest growth in Digital and eFulfilment. The UK share saw revenues here ballooning 40% from the same 2019 period as Covid-19 lockdowns increased online shopping volumes.
In addition, its said its third-quarter revenues in the Public and Industrial sector had “been boosted by strong volumes in construction and the increased utilisation of the Group’s shared transport network.”
And it noted that the business benefited in recent months from a series of recent contract wins. These include a mandate to provide logistics services at several Inland Border Clearance Centres. A contract for the storage, order fulfilment and delivery of testing kits to priority locations has boosted work volumes too.
Meanwhile, Wincanton added that “further significant new business in Digital and eFulfilment for both Waitrose and Dobbies will commence before year-end.”
That’s all good news James Wroath, chief executive of Wincanton, was upbeat. He said: “The strong performance of our underlying business and the new contracts we are implementing in our strategic growth markets are clear evidence that we are delivering on our strategy even in the difficult current climate.”
City analysts reckon Wincanton’s full-year earnings will slip 24% in the current fiscal period. But they reckon annual profits will rebound 14% in financial 2022. At current prices, this UK share trades on a forward price-to-earnings (P/E) ratio of 11 times.
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.