40 år i branschen
185 800 kunder världen över
15 000 marknader

JD Wetherspoons on the acquisition trail

JD Wetherspoons will announce its first-half figures on Friday 13 March, and a continuation of its strong performance is expected. 

A woman pouring beer
Source: Bloomberg

Wetherspoons set the pace for the British pub trade by posting record annual profits last year. The company revealed revenue and pre-tax profits of £1.4 billion and £78.4 million respectively, compared with revenue of £1.3 billion and pre-tax profits of £57.2 million the year previous.

The downturn in the UK economy a number of years ago led to difficult trading for many of Wetherspoons' competitors, but its relatively low prices made it stand out from the crowd, ensuring the company remains in a good position now that the economy is back on track.

Wetherspoons opened 46 new pubs last year, and this is in stark contrast to the rest of the industry which has witnessed more than 10,000 pubs close since 2002. The firm plans to open an additional 200 pubs in the next five years, and that would increase its headcount by 15,000.

As I previously stated, the company is making inroads into the lucrative Irish market, and its no-frills pubs and low cost drinks are sure to shake up the pub trade in the Emerald Isle.

Wetherspoons will announce its full-year numbers in September, and the consensus is for revenue of £1.51 billion and adjusted net income of £60 million. These forecasts equate to a 7.85% increase in revenue and a 5.5% increase in adjusted net income.

Equity analysts are bullish on the pub chain, and out of the 19 recommendations, four are buys, 12 are holds and three are sells. The average target price is £8.05, which is marginally below the current price. Investment banks hold a more bullish outlook on rival Mitchells & Butlers, and out of the 20 ratings, 14 are buys and six are holds. The average target price is 499p, 9.5% above the current price.

The share price has been trading sideways recently, and £8.20 is acting as resistance. If this level is held it will bring the support at £7.70 into play. A move through £8.20 will make £8.45 the initial target, and if that level is cleared it will put £8.70 in sight. 

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