Outlook: Delivering change
We believe FY16 marked a turning point for Stobart, as its Energy (biomass) and Aviation (Southend Airport) businesses began to make meaningful progress on their ambitious FY19 targets. Improving returns on these drive our three-year EBITDA CAGR for Stobart Group to 25% by FY18. However, continuing upside from monetising its significant land bank is equally important. Land disposals have paid for Stobart’s dividend while its operating activities have been ramping up. With both operational and investment returns driving improving cash flow, we are optimistic about Stobart’s outlook and ascribe a fair value of £1.35 to the stock.Stobart Group is a U.K. infrastructure and support service business and has investments in a national property and logistics portfolio. Co.'s operating segments are: Stobart Energy, which supplies sustainable biomass for the generation of renewable energy; Stobart Aviation, which operates commercial airports, airline operations and leases aircraft; Stobart Rail, which delivers internal and external civil engineering development projects; Stobart Investments, which holds a non-controlling interest in a transport and distribution business; and Stobart Infrastructure, which focuses on management, development and realization of property assets and investments in biomass energy plants.
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