Leading analyst Mark Brumby at Langton Capital looks at why JD Wetherspoon has spent another £325,000 today buying back its own shares.
He said that in looking at JDW and other pubs quality licensed retailing and share buybacks are both important factors in considering whether to invest. However, he stressed that when it comes to choosing between what people say and what people do, it’s the former that counts.
He said: Here, JDW seems to be getting it right. Langton visited one of their units for breakfast this week (monster Full English £5.49, cup of tea £1.15, free water, three of us in, well fed and out for less than £20) & it was doing a fair trade. Perhaps 25 in the shop but estimated turn maybe 4x or 5x so we’re looking at £500 per pub per day. Margins could be low but it keeps the tills ringing & the rent doesn’t stop just because your doors are shut.
“Visited another at 5.15pm Tuesday, small upstairs, cavernous minus one level, perhaps 200 people in, all spending, good selection of beers & to attract such a mixed crowd so early, the unit was clearly doing something right.
“And now the co is buying its shares back. Another £325k announced today, 43,205 shares acquired at 756p. JDW may be bonkers but, whether it is or it isn’t, it seems to believe that its shares are attractively priced & so do we.”
