Although troubles in the UK vehicle hire market have long been a bugbear for Northgate(LSE: NTG), I believe the company's fresh management team could herald a new beginning for the company.
Northgate has long been losing share as light commercial vehicles have opted for contract rentals or straight-out ownership. But new chief executive Kevin Bradshaw, the previous head of Avis Europe's UK division, would appear the right man to revamp Northgate's ailing fortunes and has already drawn up a strategic review to be released in June.
Amongst the changes likely to be identified are much-needed improvements to Northgate's marketing activities, and equally importantly changes to the way its sales teams operate -- indeed, the huge turnover of sales staff at Northgate has been a massive problem in recent times.
Northgate has been showing some signs of improvement more recently, however, the company reporting in December that growth in closing vehicles on hire in the UK clocked in at 100 during May-October. This compares with the 1,200 reduction printed in the first half of fiscal 2016.
Ready to motor
My cautious optimism is shared by the City's legion of brokers, too. While Northgate is expected to endure a second successive earnings drop in the year to April 2017 (a 4% decline is currently expected), the company's turnaround strategy is expected to deliver modest growth 1% and 3% in fiscal 2018 and 2019 respectively.
These figures can hardly be described as jaw-dropping. But I believe Northgate's ultra-low valuations certainly can be -- the business sports P/E ratios of 11.1 times for the forthcoming period, comfortably below the broadly-regarded value yardstick of 15 times.
Meanwhile, a predicted 17.7p per share dividend for fiscal 2018 (yielding 3.3%) provides an added sweetener. I reckon Northgate's touted earnings bounceback could lead to much bigger returns as it plots a course back to growth in the UK.
Cheap and cheery
Financial services provider JRP Group (LSE: JRP) has been a disappointing performer more recently, the stock shedding 16% of its value during the past two months alone.
But for half-glass-full investors this could be considered a shrewd buying opportunity. JRP is expected to follow last year's bounce back into profits in 2017 with a further 9% advance, leaving the business dealing on a mega-low P/E ratio of 8.8 times. And growth is expected to rev higher from next year (a 21% rise is presently chalked in for 2018).
With the likes of Prudential and Standard Life having exited the annuity market, this leaves plenty of revenues opportunity for JRP to exploit. But this is not the only reason for investors to be optimistic as the rapidly-growing lifetime mortgage segment, for example, threatens to give the top line an additional kick higher.
Meanwhile, the cost synergies of the Just Retirement and Partnership merger are also running ahead of plan, with £30m worth of savings already realised out of a planned £45m by end-2018. I reckon there is much for growth investors to get excited about for the years ahead.
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Royston Wild has no position in any shares mentioned. The Motley Fool UK has recommended Northgate. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.