Leading analyst Mark Brumby at Langton Capital has said that JD Wetherspoon’s Q1 represented a strong performance in terms of sales (margins were lower) but, against the backdrop of tougher trading outside the key Xmas days, this momentum has “clearly faltered somewhat”.
Brumby said: “Lower LfL sales will prove to be a drag on margin and JDW once again cautions that this will be lower this year than last. We have little doubt that JDW will be outperforming its competitors – and particularly those without access to the funds to invest.
“Longer term, we are expecting to see the group open around 40 units per annum for the foreseeable future and it has shown itself willing to buy back shares.
“JDW is a superlative operator and, though hardly cheap, its shares do not look unduly expensive at c16x this year’s earnings with a yield of 1.5%. Having said that, the group has once again managed to disappoint on margins and the shares could come under some downward pressure today. Any material weakness may present a buying opportunity.”
