Leading analyst Nick Batram has said he expects The Restaurant Group to meet market expectations when it gives a post-close update next week.
He said: “A softer Q3 trading update in November, with LFL slowing to 2.5% (impacted by the Rugby World Cup), together with news that the roll-out would be towards the bottom end of guidance, knocked confidence in the stock. That there was also some downward tweaking to 2016 (and beyond) didn’t help either.
“However, with the Q4 film slate the strongest in recent years, even some weather disruption in the North shouldn’t prevent the year ending on a firmer note. Therefore, we would expect the group to meet market expectations.
“Management’s challenge will be to continue to deliver double-digit EPS growth against a backdrop of rising labour cost, little pricing power and increasing supply. Nevertheless, the group has proved over the last 10 years that when the going gets tough, it consistently outperforms.
“A positive year-end update will help rebuild some of the lost confidence and focus attention back on the high returns on investment being achieved.”
