Financial Trading Blog
Stock of the day 08/01/2015 – Restaurant Group PLC
The owner of high-street food chains that include Frankie & Benny’s, Chiquito and Garfunkel’s opened 2014 at £5.93 after 2013 had seen an uninterrupted rise from £3.92. Unfortunately for the company 2014 wasn’t as smooth sailing as the previous year, and after reaching its peak of £7.17 at the start of April, Restaurant Group struggled in spring, hitting its 2014 low of £5.53 in mid-June. After this slump share prices managed to stabilise between £6.30 and £6.80 with the company constantly hovering between these marks for the second half of the year. It opened 2015 at £6.52, and reached £6.80 on the day before the trading update.
Figures wise things are looking relatively positive for Restaurant Group, as its November trading statement revealed that year-on-year sales were up 10.3% with like-for-like sales up 3%. However sales since August had weakened, and if this trend continued it will be felt in the trading update tomorrow. The company did reiterate its full year guidance, so any deviance from this promise shown in the update will spook investors and cause problems for the company’s share prices.
Restaurant Group was fairly aggressive with its expansion in 2014, as it opened 24 new restaurants in the UK as of November, with the expectation of opening another 16 before the year closed. However, rather ominously for the statement tomorrow, the price of this expansion will be incurred in the final quarter of the year, and with costing pressure an issues mentioned in November, Restaurant Group could feel the squeeze from its every-growing limbs.
Analysts are mixed over the state of Restaurant Group as JP Morgan Chase & Co downgraded the stock to ‘overweight’, whilst Numis Securities said ‘buy’ and Deutsche Bank said ‘hold’. Overall analysts have an average rating of ‘hold’ with an average target price of £7.30. It seems the success of tomorrow’s statement depends on how well Restaurant Group has dealt with its slack sales in the fourth quarter and the price impact of its ambitious expansion.
It's easy to open an account
- Fill in our simple online application form
- Fund your account
- Start trading the global markets instantly!
SEARCH FOR AN ARTICLE:
Enter a keyword and search for all relevant articlesMARKET ANALYSIS
RECENT POSTS
DISCLAIMER
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 64% of retail investors lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money. For professional clients, spread betting and CFD trading can also result in losses larger than your initial stake or deposit.
Spreadex Ltd is authorised and regulated by the Financial Conduct Authority, provides an execution only service and does not provide advice in any way. Nothing within this update should be deemed to constitute the provision of investment advice, recommendations, any other professional advice in any way, or a record of our trading prices. This update does not constitute or form part of an offer of, or solicitation for a transaction in any financial instrument, nor shall it or the fact of its distribution form the basis of, or be relied on in connection with, any contract therefore. Any persons placing trades based on their interpretation of the comments or information within this update does so entirely at their own risk.
No representation, warranty, or undertaking, express or limited, is given as to the accuracy or completeness of the information or opinions contained within this update by Spreadex Ltd or any of its employees and no liability is accepted by such persons for the accuracy or completeness of any such information or opinions. As such, no reliance may be placed for any purpose on the information and opinions contained within this update.
The information contained within this update is the intellectual property of Spreadex Ltd and is protected by UK and International copyright laws. All rights reserved. Users may however freely download, distribute and reproduce extracts of the contents, subject always to accrediting Spreadex Ltd as the source and providing a hyperlink to www.spreadex.com.
