LONDON (ShareCast) - After 25 consecutive years of growth outsourcing firm Mitie is highly valued but some in the City are wondering if the price has got ahead of itself, notes Tempus in The Times.

Monday's trading statement indicates that all remains well. Mitie concedes that the world is in a difficult place, but reports that the number of companies and public authorities looking at outsourcing plans and energy saving schemes is strong and sustainable. Broker Investec is happy to put Mitie on a forward multiple of 13 times earnings, meaning a target price for the stock of 310p a share, up from 295p. Late last year Tempus was wary of Mitie’s rating of trading at 11 times next year’s earnings. Holders of the stock should be happy to remain so, but we see no reason to change our caution.

The Lex column in the Financial Times has noted that shares in FirstGroup have been going like a train recently - the shares are up by more than a third in the last two months - and deduced that the market thinks the bus and train group is the favourite to win the West Coast rail franchise.

Success would improve the company’s finances, at least in the short term, Lex says. Its net debt of £1.8bn at the end of March was a chunky 2.5 times its earnings before interest, tax depreciation and amortisation. If FirstGroup can tread the line between austerity-hit customers and truculent unions, it should be able to squeeze out better returns. It will need to justify the price, and investors will be watching closely – FirstGroup’s shares have lagged behind Stagecoach and Go-Ahead over one, three and five years, Lex observes. As passengers might say, better late than never.

Winning contracts is turning out to be child’s play for Eckoh. The speech recognition and associated payment solutions provider will announce this morning that it has bagged a significant deal with Kiddicare, the online baby products company owned by Wm Morrison, to provide secure card payment services over the phone.

Echoes of its troubled past - the company was at the centre of a TV phone-in scandal in 2007 - have subsided and the business, which has achieved double-digit revenue growth in the past four years, appears to be on track to hit that mark again. The glut of deals will also add some excitement ahead of its annual meeting on Wednesday. The shares have almost doubled since the start of 2011, notes Tempus, but still do not look pricey when cash on its balance sheet is accounted for.



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JH

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