Comparing Jarvis and MITIE
Both produced half-year results this week. Both have new-ish chief execs (Richard Entwistle and Ruby McGregor-Smith). But it’s hardly a fair fight: Jarvis is a stockmarket dog and MITIE a darling. Why?
In one sense, it’s obvious. The two sets of figures are chalk and cheese. Jarvis reported falling sales (-5%), a small loss (£0.6m) and a dangerous load of debt (£41m; about the same as its market cap). MITIE pushed revenue ahead 17% and margins up from 4.8% to 5.1%, so earnings grew 24%. Its shares, always good performers are up another 20% in the last year; Jarvis’ aren’t.
But in another sense, something strange is going on. Credo cares about strategy and, to our eyes, Jarvis has the clearer sense of purpose. ‘Rail, Plant and Freight’ is a simple and coherent positioning. MITIE’s report is gunked up with modish talk of partnership and passion, but gives little sense that management have thought through (properly) what the company stands for or where it’s heading.
So which company do we prefer? MITIE obviously! We’ve said this again and again, some companies are just better than others. And MITIE’s advantage runs deep. Some temporary confusion at the top can’t obscure this, at least not for a long while.
