Merlin Entertainments is a ‘hold’ as Alton Towers accident affects trading

1st December 2015

As Merlin Entertainments reports its fourth quarter trading statement, Ian Forrest, investment research analyst at The Share Centre, explains what it means for investors…

In a trading statement today Merlin reported that it expects full year group results to be in line with its previous guidance, although there are a number of peak season trading days left for attractions in Australia and New Zealand.

Revenue growth in the Legoland parks remains strong but trading at Alton Towers continues to be well below last year’s level.

Investors should be aware that most of Merlin’s businesses are performing well.

It is developing its brands and expanding into a variety of markets with good growth potential.

However, the issues relating to the Alton Towers accident could persist and we would like to see stronger earnings growth to justify the high rating. We would therefore recommend the shares as a ‘hold’ for medium-risk investors seeking growth.

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