Investors will gain an insight into how Interserve (IRV) is getting on with an integration of the Initial business it acquired last year at half year results expected on 12 August.

The £250 million deal to buy the facilities management unit from Rentokil (RTO) was completed in March last year and early signs are good. It helped Interserve deliver 10% organic revenue for the 2014 full year.

Sanlam analyst Andy Brown says the shares look cheap ahead of the half-year announcement.

Consensus earnings per share at 63p for the full year place the stock at a price-to-earnings ratio of 10.2 for the 2015 full year and 9.3 for 2016. This looks like an 'undemanding' valuation, Brown writes in a 7 August update.

INTERSERVE - Comparison Line Chart (Rebased to first)

‘Despite negative political sentiment, the fundamental drivers behind outsourcing remain positive while Construction will always be cyclical,’ he adds.

Trading was solid in the early part of 2015, according to a trading statement issued on 7 July.

Strength in support services and international construction was offset to an extent by weaker UK construction markets, management said.

‘The shares have been a good performer over a number of years but the share price has become range-bound of late, trading a 500-700p range (645p last night close),’ adds Brown.


Issue Date: 07 Aug 2015