Daily Stock Market Report (Wed 8th July 2026) - ZIG, SYS1, IGG, GYM, VTY, JET2

Iran conflict: hostilities resumed between the US and Iran last night, threatening peace negotiations and sending the price of Brent crude oil up $4.

US forces struck 80 military targets, most of them small boats in and near the Strait of Hormuz, with the following justification:

Iran recently attacked three commercial vessels transiting the strait... The unwarranted aggression by Iranian forces is a clear and dangerous violation of the ceasefire and undermines freedom of navigation.

The US also cancelled a waiver that allowed Iran to sell crude for 60 days without fear of sanctions.

In response, the Iranian Revolutionary Guards say that they struck US bases in Kuwait and Bahrain.

Both sides are still officially committed to the ceasefire and to the creation of a long-term peace agreement.

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System1 (LON:SYS1): I'll be speaking to SYS1 this morning, let me know if you have any questions you'd like me to ask them!

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Overnight market movements:

• The FTSE is down 0.1% at 10,670

• S&P 500 is down 0.1% at 7,495

• Brent crude (September delivery) is up 3.2% at $76.60/bbl

• Gold is up 0.5% at $4,128/oz

• Bitcoin is down 1.6% at $66,650

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Wrapping it up there, thank you. Spreadsheet accompanying this report: link.

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Graham's Section

System1 (LON:SYS1)

Down 4% at 300p (£38m) - Final Results - Graham - AMBER/GREEN =

Investor Meet Company - System 1 will be presenting on IMC today at 2pm, if you’d like to hear management speak!

I was given the chance to speak with them this morning, so I asked some broad questions about the profile of the business. Many thanks to CEO James Gregory and CFO Chris Willford.

The headlines from today’s final results had already been provided in an April trading update that I discussed here.

System1 is a “marketing decision-making platform”. The company was previously known as Brainjuicer. It was founded by John Kearon who is still on the Board and is a major shareholder.

For a small company that has been around for a long time, I think it’s fair to say that it has become a source of frustration for small shareholders:

Last year proved to be disappointing as growth projections had to be rolled back after US companies cut their marketing budgets.

Let me remind you of the headlines from these full-year results to March 2026:

• Revenue down 1%

• PBT down 60% to £2.1m

• Net cash at year-end £12.4m.

I started my management call asking them to explain how this is a scalable business. The answer was straightforward: they enjoy very high margins of 87% on their “Data” product (e.g. “Test Your Ad”).

Management’s point of view, which is backed up by performance in prior years, is that incremental Data revenues can drop through to profits very efficiently.

However, as things stand, operational leverage has worked against them in FY26.

I asked them to explain how £37m of revenues results in just £2.1m of pre-tax profit, if this is a scalable, profitable data product.

The answer is that they are simply not big enough yet: they are close, but need another £10-20m of revenues to demonstrate strong profitability.

Thanks to CFO Chris Willford who pointed me in the direction of Note 16 of their accounts:

As you can see, there is nearly £20m of employee benefit expense.

For every extra £1m of Data sales that they make from here, they would expect to make very strong profit margins on that. As I’ve mentioned already, the gross profit margin is 87%. Most of the costs in the table above are fixed. Even within employee benefit expense, many of those costs are fixed.

So in order to get from here to a more profitable future, they need to grow - grow in the US especially, and grow their share of the world’s largest advertisers.

They mentioned Covid, tariffs and Iran - geopolitical issues that have hurt sentiment among their customers at various stages of their journey.

Competitive advantage? I asked how they can compete given that many US rivals would probably like to offer a similar product. Their response was that they have an enormous database that derives from constantly testing thousands of ads. This database can apparently train their future products, and gives them a depth of understanding that can’t be replicated purely by software.

Today’s results

Let’s switch over to today’s results and give you the latest outlook statement. With emphasis added by me:

We have entered FY27 with momentum and confidence.

The investments made over recent years, combined with the cost efficiency actions taken during FY26, have created a stronger and more focused business, positioning us to improve profit margins. We have a growing customer base, deeper relationships with major brands and encouraging progress across our strategic priorities.

Our focus for the year ahead remains clear: continue to grow in the USA, further strengthen relationships with the world's largest brands, continue developing our Innovation and AI capabilities, and continue improving operational efficiency to scale seamlessly… we believe the long-term opportunity for System1 remains significant and we enter FY27 well positioned for further growth.

As you can see, there is a lot of focus on margin and on scaling the business (goals that go together hand-in-hand).

Estimates

There is no change to forecasts at Singers. They see adjusted earnings per share almost doubling to 21.2p this year on the back of a modest increase in revenues to £38.4m. Adjusted PBT is seen almost doubling to £3.9m.

Graham’s view

We’ve been moderately positive on System1 and I’m comfortable leaving that stance unchanged today.

The bullish argument I could make is that enterprise value is only £26m and that if it hits forecasts, the cash-adjusted P/E multiple is only about 9x.

(Without making that adjustment, Stockopedia sees a multiple of about 14x.)

A cash-adjusted P/E multiple of 9x would be modest for a business that is still early in its potential growth journey. If it does scale up from here and see operational leverage working in its favour, then it is far too cheap at current levels.

What holds me back from taking a more positive stance is some lingering uncertainty around its growth prospects. While I acknowledge that their customer spending is volatile and that they’ve had some difficult macro events as a backdrop, it remains the case that their “Platform” Revenue hasn’t moved far in the short-term:

• FY25 £34.5m (up strongly by 39% compared to the prior year).

• FY26 £35.5m

• FY27: total revenue is seen growing by 4% (Singers).

In short, I just don’t have much conviction, and I don’t think the numbers encourage conviction, in an imminent high-growth story.

And if revenues only grow by modest single-digits, that makes it harder for positive operating leverage to kick in against inevitable cost base inflation.

I still think that a moderately positive stance makes sense, given the cheap valuation. I’d just need more evidence and clarity around the strength of its growth prospects before upgrading our view here.

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IG group (LON:IGG)

Down 2% at 1825p - New holding Company proposal and trading update - Graham - GREEN =

(At the time of writing, Graham has a long position in IGG.)

I’ve been looking forward to an update on the Strategic Review at IG Group.

We have an important proposal:

As part of the strategic review, IG today announces a proposal to establish a new Group holding company ("New HoldCo"), incorporated in Jersey, subject to shareholder and regulatory approval.

The new structure will give the Group greater financial and strategic flexibility and better reflect its international footprint, with around two-thirds of revenue now generated outside the UK. It will not change IG’s listing, tax residence or London operations:

Now I’m not entirely sure how IG might wish to use this flexibility. But it could be to do with dividends/buybacks, mergers or acquisitions.

On its own, this isn’t a very exciting announcement. But it could set IG up nicely for future exciting announcements.

Indeed: “the strategic review is evaluating other routes to maximise shareholder value, including acquisitions to accelerate growth, the Group's listing venues, and potential combinations of parts of the Group with other industry participants.”

Organisational model: three regional divisions along with Freetrade are being merged into “IG Consumer”. North America and Institutional will remain separate divisions. Sounds logical.

H1 trading update:

The Group expects to report H1 2026 total revenue of approximately £643 million, up around 18% on the prior year, and organic total revenue of approximately £624 million, up around 16%. First trades increased approximately 107% on a reported basis and 74% organically, and active customers increased approximately 66% on a reported basis and 13% organically, in each case on the prior year.

I’m not unhappy with these organic growth rates!

Guidance is reiterated for 2026:

• Organic revenue up 10-15% year-on-year.

• EBITDA margins in the mid-40s percentage range, as previously guided.

Beyond 2026, the Board remains confident the Group can compound organic total revenue at least 10% per annum on the 2025 base, with EBITDA margins sustained in a mid-40s per cent range.

Graham’s view

There’s no bombshell announcement here. We’ll have to wait until the Strategy Update in the Autumn to find out the conclusions of the Strategic Review.

In the end, they may decide to do nothing - but I doubt it. This review has been trundling along for some time, and I suspect that Breon Corcoran is interested in another mega-deal.

For my part, I’m relaxed. IG will approach any merger ideas from a position of strength. I just hope that management don’t get too distracted by M&A so that they end up neglecting the core business. But that doesn’t seem to be the case. Organic growth remains very impressive (helped naturally by the geopolitical tensions that have been problematic for so many other businesses).

I’m staying GREEN on IG as nothing fundamental has changed, and it’s important to stay positive on ideas that are working. This is an important personal holding for me that I’ve held for many years and as things stand, I intend to continue holding it.

The StockRanks love it but I should acknowledge that they see limited value on offer at this level: momentum is carrying it higher.

It’s expensive compared to other financial stocks, but personally I see it as offering much higher quality than other financials:

Interactive Brokers (NSQ:IBKR), for example, has a P/E multiple of 35x and has always been very highly-rated. One simple thing that IG could do after their Strategic Review is to list in the United States.

I know I’m dreaming, but if IG Group was listed in the US, why wouldn’t it get a P/E multiple that’s much closer to 35x than to its current 14x? I don’t think it’s obvious that it’s a worse business than Interactive Brokers. So that’s my free advice to the IG board of directors: get dual-listed!

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Roland's Section

ZIGUP (LON:ZIG)

Down % at p (£m) - Title - Roland - GREEN =

Graham upgraded our view on “integrated mobility solutions provider” ZIGUP to GREEN in May.

A StockRank of 98 ahead of today’s results also suggests this business could offer a tempting combination of quality, value and momentum.

ZIGUP owns the Northgate van hire/fleet management business in the UK, a similar business in Spain and the former Redde accident and claims management operation.

Do today’s results justify such optimism? The numbers are not without complexity, but I believe the overall picture they reflect is a) broadly positive and b) in line with expectations.

FY26 results summary

Here are some key numbers from ZIGUP’s results for the year to 30 April 2026:

• Revenue up 2.6% to £1,858.9m

• Underlying pre-tax profit down 4.1% to £160.1m

• Reported pre-tax profit up 0.5% to £102.0m

• Underlying earnings per share down 9.2% to 53.1p

• Dividend up 2.3% to 27.0p per share

• Net debt up 19.4% to £999m

The decline in underlying profit requires some explanation. In short, profits from the sale of ex-rental vehicles are falling from exceptional levels triggered by supply shortages during the pandemic to more normal levels:

The used vehicle market has been relatively stable over the past 12-18 months after a period of significant supply/demand imbalance, with disposal profits moderating as expected. These are likely to continue to moderate as the historic lack of new supply in 2021-23 reduces defleet volumes for a period, before the market readjusts as a greater number of used vehicles appear on the market.

Selling ex-rental vehicles is an integral part of the vehicle hire business model, but the decline in disposal profits is masking continued growth in the core rental business.

In an effort to illustrate this, ZIGUP has provided two versions of revenue and three versions of EBIT today:

• Revenue: £1858.9m (+2.6% YoY)

• Revenue ex-vehicle disposals: £1,636.3m (+5.2% YoY)

Stripping out disposal revenue showcases a stronger rise in revenue from the group’s other operations.

However, ZIGUP generated £223m in revenue from used vehicle sales last year. These made a notable contribution to profits:

• Underlying EBIT: £200.5m (-0.7% YoY)

• Underlying EBIT ex-disposal profits: £164.0m (+9.7% YoY)

• Reported EBIT: £142.4m (+4.3% YoY)

Disposal profits fell from £52.5m to £36.5m last year, a reduction of 30.4%. Even after this decline, the EBIT margin of 16.4% on these used sales is still well above the broader group EBIT margin of 12.3%.

I don’t know where used margins are likely to level out, but I am not sure I agree with treating disposal profits as an adjusting item to the core business. Proceeds from disposals have always been and will likely remain a material contributor to group profits.

There will naturally be some ebb and flow in the profitability of different elements of the rental business, but in my view it makes sense to focus on overall returns on capital and cash flow – topics I’ll return to shortly.

First of all, I want to summarise the performance of the group’s three operating segments:

UK & Ireland Rental

• Revenue -5.4% to £542m

• Hire revenue +5.2%

• Disposal revenue -28.4%

• Underlying EBIT down 13.4% to £78.2m

• ROCE down 3.1% to 9.4%

• Average Vehicles on Hire (VOH) down 1.5% to 43.3k

• Average utilisation: 91% (unchanged)

UK profits were clearly hit hard by the declining value of disposals. However, underlying rental performance and demand appears to have been stable or moderately positive and the fleet age has now normalised:

Rental profits rose 7.3% and rental margins reflected strong performance in every rental business, especially in higher margin channels, cost control across the underlying rental businesses and high utilisation levels. The average fleet age of 25.0 months is now well within our operating range, enabling fleet recycling activities to normalise.

I don’t see too much to worry about here, except perhaps for somewhat sluggish underlying growth.

Spain Rental

The picture was quite different in Spain. Disposal proceeds improved and demand also appears to have been much stronger, supporting fleet expansion:

• Revenue up 15.4% to £433.4m

• Hire revenue +16.2%

• Disposal revenue +12.1%

• Underlying EBIT up 12.1% to £91.6m

• ROCE down 0.7% to 11.6%

• Average VOH up 9.5% to 66.8k

• Average utilisation: 91% (unchanged)

Spain was the largest contributor to profit last year, thanks to a fleet size c.50% greater than the group’s UK operations. Profitability is also stronger, with Spain maintaining double-digit ROCE and an underlying EBIT margin of 26.3% (vs 19.0% in the UK).

ZIGUP is the market leader in Spain and enjoyed “strong” contract growth last year, including a rail maintenance provider with 700 vehicles on rent by the year end.

Claims & Services

This part of the business operates a network of bodyshops and provides related services such as recovery and replacement vehicle provision. It’s low margin but generates higher returns on capital than the core rental business.

• Revenue up 0.2% to £935.2m

• Underlying EBIT up 7.0% to £41.0m

• EBIT margin up 0.3% to 4.6%

• ROCE up 6.6% to 24.25

The quality of this business was also improved last year – in my view – by ZIGUP’s decision to exit the personal injury market. The company’s remaining PI claims book has now been outsourced.

Balance sheet & cash flow

ZIGUP helpfully provides details of both replacement capex and growth capex. Few companies do this, but it can be useful when helping to estimate free cash flow generation from the underlying business.

Free cash flow is another metric where ZIGUP likes to provide a more favourable alternative metric – in this case, “steady state cash generation”. This is a pre-tax measure that excludes growth capex and working capital movements.

• Steady state cash generation £95.7m (FY25: £16.7m)

• Growth capex: £132.4m (FY25: £65.1m)

• Company-calculated free cash flow: £(74.7)m (FY25: £(58.1)m)

Stripping out growth capex gives me an underlying FY26 free cash flow estimate of £58m (FY25: £7m).

Looked at this way, dividend payments of c.£59m in each of the last two years have perhaps been a little too generous, as in real terms they are likely to have required some support from borrowed cash.

ZIGUP’s net debt levels have certainly been rising, as it has funded fleet growth with its balance sheet:

• FY24 net debt: £742.2m (1.5x EBITDA)

• FY25 net debt: £836.7m (1.8x EBITDA)

• FY26 net debt: £999.3m (1.9x EBITDA)

This level of borrowing remains under the company’s target maximum of 2.0x, although it’s slightly above my preferred limit of 50% of fleet assets, which ended last year at £1.8bn. I don’t think there’s too much to worry about though.

Overall net assets were stable last year, ending the year at 477p (FY25: 474p).

Profitability

This is a capital-intensive business in a competitive market, so I’d only really expect to see fairly average levels of profitability. Last year’s results support this view:

• Operating margin: 7.6%

• ROCE: 7.1%

These figures are also in line with the group’s medium-term record:

Outlook

We don’t have access to any updated broker notes for ZIGUP today, but today’s FY27 guidance is for a result that’s in line with expectations for adjusted pre-tax profit of £162.9 - £170.0m).

Consensus forecasts on Stockopedia suggest this will translate to FY27 adjusted earnings of 55.1p per share, putting ZIGUP on a forward P/E of 8.1x with a dividend yield of 5.9%.

The company also says that it’s tracking towards its target of generating more than £200m of steady state cash from FY28. That seems encouraging, but as we’ve seen earlier this measure doesn’t necessarily map onto free cash flow due to additional outflows for growth. For this reason, I’d be wary about using the £200m figure as the basis for a valuation estimate.

Roland’s view

Today’s results seem fine to me and I’ve no reason to doubt the company’s guidance for another year of progress. While I’d like to see slightly stronger free cash flow support for the dividend and moderating leverage, I don’t think either factor should become a problem.

The decline in disposal profits doesn’t concern me as I can see that it’s a natural function of normalising vehicle supply chains since the pandemic.

I can see some potential for capex to moderate slightly now the fleet age has normalised, supporting improved cash generation. I can also see that cost control efforts are improving margins (slightly).

In terms of valuation, the shares currently trade slightly above their tangible book value of 428p. I’d argue that this is about right for a business generating a c.8% return on equity. However, I do respect the improving trend of earnings forecasts over the last year:

ZIGUP’s near-6% dividend yield is also an attraction.

To avoid too much flip-flopping, I’m going to leave our previous GREEN view unchanged today, with the caveat that I think fair value for the shares is somewhere around the 500p level.

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Vistry (LON:VTY)

Down 6% at 237p (£750m) - Trading Update - Roland - AMBER/RED =

Unusually for a housebuilder, Vistry doesn’t try to sugarcoat its recent discounting with talk of incentives. The company is simply cutting prices to shift stock more quickly. This appears to be having a positive effect, too.

Vistry says it reduced inventories of unsold private homes from c.£600m to under £300m in H1, while also starting to exit its part exchange offer, which has historically tied up c.£50m of debt. However, the average discount of 7.1% is quite high and of course implies some properties may have been discounted by more than this.

These measures give us an idea of the financial pressure the group is under, but liquidating assets can be a very effective way of generating cash inflows to reduce leverage.

Today’s guidance on debt is mixed: while the company still expects to achieve net cash of at least £100m at the year end, H2 average daily debt is only expected to be “below £650m”, compared to £799m in H1.

To me, this suggests a substantial window-dressing effort will be required to achieve the year-end net cash figure – I prefer to focus on the average daily figure as being more representative of a builders’ financial state.

Outlook: the company expects to meet consensus forecasts for 2026:

As a result, the Board expects that adjusted profit before tax for FY 2026 will be in line with the current market consensus (Company compiled analyst consensus for 2026 is adjusted PBT of £200m). This forecast excludes any impact from the ongoing CEO Review, the findings of which will be detailed on 24 September 2026 in the Half Year results.

However, I think it makes sense to look beyond this single headline (and heavily adjusted) figure.

Liquidating assets can be an effective strategy to reduce balance sheet pressure. But it needs to be followed by a return to suitable volumes of profitable new-build work in order to put the business on a sustainable footing.

Commentary today on the forward outlook seems mixed to me.

On a relatively positive note, the forward order book stood at £3.9bn at the end of H1 and Vistry says it’s 80% forward sold for FY26 – I assume this is relative to consensus revenue forecasts.

Build cost inflation is stabilising at 3-4% after a more challenging H1 and the company expects “materially improved H2 profit performance” as volumes rise and overhead costs fall.

There will also be additional profit from land sales “as we reshape the landbank”.

I think the short term impact from all of this should be positive. What’s less clear to me is the outlook for the next 12-18 months. Several potential headwinds are highlighted:

• “Open Market [private sale] conditions deteriorated in the second quarter [...] we are not anticipating a significant change in Open Market conditions in H2 or early 2027”.

• While Vistry remains committed to the partnership building model, “we have renegotiated several deals with partners that did not meet our commercial requirements”. This has resulted in delays to the completion of some deals, while the company has opted not to proceed with some transactions.

• While the government’s Strategic Affordable Housing Programme (SAHP) continues to offer potential, progress so far has been limited and remains uncertain. The initial grant allocation process is expected to complete in September, when the picture may become clearer.

Roland’s view

Vistry shares are trading at a discount of c.75% to book value after an 80%+ decline over the last two years:

Such a deep discount normally implies a measure of distress. In this case, the risk is that the company may need to raise new equity to reduce debt to sustainable levels.

Based on today’s evidence, I would suggest that this remains a risk, although not a certainty.

We should learn more about the outlook when new CEO Adam Daniels provides a strategy update in September.

At this stage I am going to maintain Mark’s previous AMBER/RED view. While there could be significant upside here if Vistry can deleverage without raising equity, I don’t think we can be sure of the eventual outcome yet.

Difficult housing market conditions are adding to the uncertainty, as is the current lack of clarity about the likely pipeline of work under the SAHP scheme. I think the stock’s Contrarian style and low MomentumRank are a fair reflection of the situation: