Financial Trading Blog
Stock of the day 24/11/2015 – Marston’s PLC
Up until May things were looking good for the pub operator and brewer (including Hobgoblin and the titular Pedigree), with its half year results sending the stock to a 7 and a half year high of £1.74. Those results saw Marston’s post a 2% increase in underlying pre-tax profit to £29.6 million, alongside a 3% rise in total group revenue to £384.5 million. Arguably most important, however, was the 1.5% jump in like-for-like sales in its food-focused pubs, an area that is central to Marston’s plans going forward.
(Source: IT-Finance.com 24/11/2015)
Yet Marston’s couldn’t maintain these highs for long. As the stock entered June it began to tumble, something that accelerated in July as investors feared the impact of the living wage. Bar a brief rebound at the start of August Marston’s continued to fall, culminating in a 6 month low of £1.47.
However, it was lifted in October by the announcement of its preliminary full year results. Brewing volumes rose 15%, largely due to the end of March acquisition of Thwaites, whilst sales at its managed estates rose 1.8% following increased footfall due to the Rugby World Cup, and like-for-like food sales jumped 1.7%. On top of this came the confirmation that 25 new pub-restaurants, as mentioned an increased focus for the company.
This helped Marston’s climb back to £1.64, its highest price since the start of July. Yet just like back in May investors weren’t interesting in keeping the company at this 3 month peak, falling to £1.53 by mid-November, before lifting back up to a current trading price of £1.61 (IT-Finance.com, 24/11/2015) in anticipation of its full year earnings release. In terms of those figures, analysts are expecting a 10% increase in full year pre-tax profit to £90.5 million.
Marston’s PLC has a consensus rating of ‘Hold’ with an average target price of £1.62.
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