Financial Trading Blog
Stock of the day 16/06/2016 – Whitbread PLC
Following years of growth 2015 saw things turn sour for Whitbread, falling from an all-time intraday high of £55.77 to a 2016 starting price of £43.59 in around 9 months. This decline showed no signs of slowing down as the New Year got underway, with the stock eventually hitting a 2 year-plus low of £36.40 in the first week of February.
(Source: IT-Finance.com 16/06/2016)
The company had managed to climb back above £40 by the beginning of March, only for that month’s trading update to cause the stock to slide back near those 2 year lows. Costa’s fourth quarter like-for-like sales edged up by a mere 0.5% against the 3% expected, while Premier Inn’s like-for-like sales jumped 2.2% against the 3% forecast for the same period. Whitbread’s headline brands did better across the year as a whole with Costa and Premier Inn managed 3% and 4.4% like-for-like sales growth respectively; the group, meanwhile, saw sales rise by 3.2%.
Following that March statement Whitbread continued to butt up against that £40 mark, with a stellar set of full year figures at the end of April, including a 5% jump in pre-tax profits to £487.3 million off the back of a 12% increase in group revenue to £2.92 billion, failing to spark a significant rise above that level. By the middle of May the stock had found a bit more momentum, eventually reaching a 2016 high of £44.02. However, that peak wasn’t to last for long, and the increasing intensity of the pre-Brexit referendum jitters have eroded Whitbread’s gains, leaving the company at a current trading price of £38.20 (IT-Finance.com, 16/06/2016).
In terms of Whitbread’s first quarter update next Tuesday the main focus will be on new-ish CEO Alison Brittain’s strategy for the company going forwards, though investors may find it hard to look past their current Brexit fears given the proximity of the referendum.
Whitbread PLC has a consensus rating of ‘Buy’ with an average target price of £48.65.
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