This morning’s Trading Update for the 26 weeks to 3 July contained no surprises, which in itself is very reassuring.
Market guidance continued
The hospitality group, which takes in ‘Fridays’, the cocktail bar and restaurant brand, ‘63rd+1st‘, and the fast casual dining brand ‘Fridays and Go’ maintained its guidance to the market that it issued in late May.
However, just as an indication of the size of the group’s fast-expanding business, it should be noted that more than one million customers visited the group’s brands last month alone.
And that is sure to be a growing number as the year progresses.
Opening even more
The group is committed to its programme of new openings, the latest being a ‘63rd and 1st’ restaurant on Frederick Street in Edinburgh. That took the group’s estate up to 63 across the UK.
Despite potentially choppy waters, due to the current environment, the group has sufficient balance sheet strength to progress its plans.
Broker has a 125p Target Price
The group’s broker finnCap is looking for sales this year, to end December, of £214.3m and adjusted pre-tax profits of £3.5m, worth 2.3p in earnings per share.
But going forward the broker’s analysts Nigel Parson and Michael Clifton have estimates out for £245.3m sales revenue next year, a trebled profit of £11.3m and 7.2p of earnings, which would see a maiden dividend of some 3.1p per share.
It is against those market predictions that the shares of this group stand out as not only being the cheapest in its sector, but also of excellent value.
Recovery and value play
At the current 34.5p the shares are trading on just 4.8 times prospective earnings and paying a very handsome 8.9% yield next year.
On the first day of trading in its shares the company’s price touched 156p at one stage, that was last November, since when they have drifted right back.
This is a massive recovery play that needs to be followed very closely and enjoyed.