Royal Mail Group Share Forecast November 2021 – Time Buy To Buy RMG?
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Shares of the British multinational postal service and courier company Royal Mail Group (LSE: RMG) are in the red today, after closing at £426.2 on 10th November (7:20 GMT). Royal Mail Group has been on the rocky road for a few months now, as the share prices are down by 16% from the past three months. The company’s ROE (return on equity) has missed the mark of industry standard which is at 18% average.
The global supply chain disruptions due to COVID-19 along with the shortage of laborers in the UK and all of Europe have been linked with RMG’s limited earning growth. According to the trading update released by the group, there will be noteworthy uncertainty for a short term. But will the company be able to revive its stellar performance as seen in the initial months of this year or will the share price continue to plummet? Let’s find out.
Royal Mail Group – Technical Analysis
As per the financial statement from Royal Mail Group, the market cap of the postal and delivery services group is at £4.333B with total assets worth £9.985B. Whereas the total revenue for 2020 was £12.64B and 2019 was £10.84B.
Moving Averages for RMG such as Exponential Moving Average (10) (429.6), Simple Moving Average (10) (430.9), Exponential Moving Average (20) (429.4) and Simple Moving Average (20) (425.3) are pointing towards selling. Oscillators such as Relative Strength Index (14) (44.2), Stochastic %K (14, 3, 3) (38.5), Commodity Channel Index (20) (-14.8) and Average Directional Index (14) (23.5) are towards neutral.
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Recent Developments
During the early onset of COVD-19 last year, the share price of RMG declined to an all-time low of £1.18. However, the company quickly recovered from the fall as it took advantage of the rapid surge in the e-commerce industry. The growing demand of parcels that were needed to be delivered influenced the stock prices and it entered the year 2021 with a high note as well.
Although the first quarter of 2021 was showing impressive performance as the revenue earned from outstripped parcels, RMG was not able to carry on with the soaring share prices as the restrictions of pandemics eased from June onwards. As normalcy returned in the country, the RMG share price plummeted. The revenue growth of the group slowed as the total number of parcel deliveries declined by 4.8% year on year.
Adding to this, the shortage of manpower and consecutively increasing energy cost are further proving to be obstacles for the company. The energy crisis is resulting in increased energy cost. This is ultimately impacting both transportation and energy costs to rise throughout the UK.
But, the RMG trading updates state that the demands for parcel deliveries will stay high in comparison to the pre-pandemic years as the transition to online shopping becomes deeply-rooted among consumers.
Should You Buy Royal Mail Group Shares?
The share price movement of RMG in the past few months was prominent on the LSE as it mounted as high as £5.79 and fell as low as £4.04. investors could get benefitted from such share price movement as they can get into the stock and buy shares at a considerably lowered price. However, the primary aspect that needs to be considered is whether RMG is currently undervalued or not.
Even though the stock of the company has potential to grow especially in the coming years as there lies a grave uncertainty regarding the UK parcel volumes which can significantly impact RMG. It is preferred to keep an eye on the changing share prices and wait till the market for RMG stabilises in the coming year.
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