Where will the Royal Mail share price be in 5 years’ time?

The outlook for the Royal Mail share price appears to be highly uncertain at the moment in my view. The company’s recent updates have been challenging, with its UK Letters division having reported disappointing performance to my mind.

Further, there is the ongoing political uncertainty in the UK. This could mean that an election is ahead in future months. With Labour apparently keen to nationalise a wide range of industries, I wouldn’t be surprised if the Royal Mail share price is held back by weak investor sentiment in the short run.

Five years is a long time, though. In that period, the company could deliver improving financial performance to my mind. A key reason for this is the progress being made in its international operations. They are growing at a relatively fast pace according to its recent updates, which suggests to me that the international part of the business may offer long-term growth potential.

There may also be a bright future for Royal Mail’s parcel delivery division in my opinion. The continuing popularity of online shopping may mean that demand for the company’s parcel delivery services increases, which may help to offset the decline in letters in the UK.

Since the company’s shares currently trade on a P/E ratio of 6, I think Royal Mail offers a large margin of safety. That’s not to say I’m anticipating a recovery over the near term. I think that there may be further challenges ahead for the business that may lead to continued disappointment over future months.

But, with what I see as a sound strategy which has growth opportunities internationally and from its parcel operations, I wouldn’t be surprised if the stock is able to produce improving performance. This, though, could take time. And, should political risks remain in place, it may mean that the recent trend of decline in the company’s stock price continues for a little while longer.