Leading analyst Anna Barnfather has said she remains a believer in the long-term fundamentals of The Restaurant Group and expects sales to have recovered from their Christmas blip when the group presents its full-year results tomorrow.
Barnfather said she expected the group to report salesof £689.7m (+8.6% YOY) to give EBIT of £88.5m (+10.0% YOY) and underlying pre-tax profits of £86.3m. She predicted like-for-like sales growth of 1.5%.
She said: “Significantly, we expect trading to have recovered from -1.7% declines since over Christmas to c+1.0% based on stronger January data including CPBT (+1.9%) and BRC footfall data (+1.2%). The stock trades on 2016E PER of 14.7x and on an adjusted EV/EBITDA ratio of 8.1x, with free cash flow yield 4.2% – this compares to Pub and Restaurant sector on PER 15.7x and EV/EBITDA 10.2x.
“We remain believers in the long term fundamentals of the business with steady roll out and continued LFL growth combined with operational excellence and rigid financial discipline.”
