Is Renewi PLC a better buy than Capita PLC, Rentokil Initial plc and Travis Perkins plc after today’s trading update?

Is Renewi PLC (LON:RWI) (RWI.L) a better investment opportunity than Capita PLC (LON:CPI) (CPI.L), Rentokil Initial plc (LON:RTO) (RTO.L) and Travis Perkins plc (LON:TPK) (TPK.L)?

Renewi
Renewi

Waste-to-product company Renewi PLC (LON:RWI) (RWI.L) has released a trading update today for the period from 1 October 2017 to date. Trading has been positive during the period and in line with company expectations.

The company’s merger synergy and integration plans are making encouraging progress. It remains on target to generate at least the €12 million committed savings for the year to 31 March 2018. The €40 million overall synergy programme is still expected to be delivered.

Its Commercial division has continued to perform ahead of the prior year. There has also been strong performance from its Monostreams division, with it being ahead of the prior year – particularly in the Mineralz segment.

There has also been performance as per expectations in the Hazardous Waste division and the Municipal division. The latter has delivered good operational progress against its recovery plans.

Renewi has reported that net debt remains in line with its expectations, and below its covenant levels. Its cash performance continues to be strong, with a tight control of working capital and replacement capex being reasons for this.

In the last six months the Renewi share price has risen 6%. That’s a better performance than other support services stocks such as Capita PLC (LON:CPI) (CPI.L), Rentokil Initial plc (LON:RTO) (RTO.L) and Travis Perkins plc (LON:TPK) (TPK.L). Capita is down 70%, Rentokil Initial is flat and the Travis Perkins share price has fallen 4% during the same time period.

In my view, Renewi is delivering on its overall strategy. The performance of its various divisions seems to be positive, and this could lead to improving financial performance in the long run. With its financial position seemingly improving with synergies and savings on track to be delivered, the outlook for the business seems to be upbeat. Therefore, I wouldn’t be surprised if its shares continue to outperform sector peers over the long run.








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Robert Stephens is a CFA Charterholder and an Equity Analyst by trade. He is a passionate private investor who has been buying and selling shares for many years, owning a wide range of UK shares in the process. He has written for Citywire and The Motley Fool US and now runs his own business. To contact Robert, please email info@investomania.co.uk or use one of the other contact methods available on the 'Contact Us' page