A leading analyst has said he expects a robust update from JD Wetherspoon (JDW) with c4% LFL sales growth in Q4 reflecting tougher comps and a weather backdrop which is more unhelpful to Wetherspoons than its peers.
Simon French at Panmure Gordon said: “We therefore expect no change to consensus forecasts of £72.1m PBT (42.7p EPS). We look for an update on the FY 2014E outlook for new pub openings and cost pressures. On our forecasts, which are in line with consensus, the group trades on a CY 2014E adjusted EV/EBITDAR of 7.9x which is a discount to the peer group average of 10.1x. We therefore reiterate our Buy recommendation and 738p Target Price.”
In Q3 Wetherspoons reported 6.3% LFL sales growth, 9.3% total sales growth and an 8.5% operating margin. This brought YTD LFL sales growth to 6.7%, total sales growth to 10.1% and operating margin to 8.4%.
French said: “We expect no change to FY 2013E consensus forecasts of £72.1m PBT (42.7p EPS). Our forecasts are in line with consensus at £72.1m PBT (43.1p EPS) for FY 2013E rising to £77.1m (46.8p EPS) in FY 2014E when we assume 2.0% LFL sales growth, 22 new pub openings and flat margins.
“The group trades on a CY 2014E adjusted EV/EBITDAR of 7.9x which is a discount to the peer group average of 10.1x. As consumer confidence returns we think there is upside to our LFL sales growth assumptions which could drive margin improvement and therefore potential earnings upgrades.”
