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FTSE 250 Shake Up Vicims Include AA and Dignity

Mon, 19th Mar 2018

The FTSE 250 reshuffle is set to take place, and among the companies set for demotion are the roadside assistance company AA, the funerals company Dignity.

AA floated on the stock market in 2014 at 250p per share. The company is struggling with debts, and is currently trading at 79p. Dignity has seen its share price fall by more than 50 percent since January, when it issued a profit warning after saying that it was forced to reset its prices in order to remain competitive in a challenging market.

The companies set for promotion into the FTSE 250 include On the Beach, a short-haul holiday firm whose shares have more than tripled since the company floated in 2015. On The Beach issued a positive trading update earlier in February, and analysts predict that the company will see a 25 percent increase in earnings per share for the current financial year, giving it a P/E of more than 26. The company is expected to enjoy high EPS growth over the next few years, which should rapidly reduce the P/E, and help to keep the stock as an appealing proposition.

Meanwhile, in the top flight, Royal Mail is set to rejoin the FTSE 100 after being demoted six months ago, while property company Hammerson is set for demotion after shedding significant value following a proposal to purchase the ailing Intu Properties group. Royal Mail remains an attractive buy for investors in spite of difficulties in the letters markets, thanks to strength in parcels.

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