Mindful Money’s weekly shares watch: Whitbread, Berkeley Group & Poundland

15th June 2015


Premier Inns and Costa Coffee owner Whitbread is scheduled to announce its first quarter trading update on Tuesday, and investors are expecting to hear there has been further growth across the group’s brands.

The FTSE 100 constituent has enjoyed a 19% share price rise over the past year. But its stock have fallen back since it reported strong full year results in late April and over four months are off by 4%.

Nevertheless, Keith Bowman equity analyst at Hargreaves Lansdown Stockbrokers says: “The budget hotelier Premier Inns is expected to report Revenue Per Available Room in the region of 7%, whilst Costa, and potentially aided by the cooler May weather, could see growth of 6%.

“Again in the region of 1% is forecast for its Pub restaurant business,” he adds.

Sheridan Admans, investment research manager at The Share Centre, who is calling the shares a ‘hold’ adds that the surprise news regarding the departure of chief executive Andy Harrison in April was followed by the equally surprising appointment of retail banker Alison Brittain as his replacement.

He says: “She is not due to start until next January but any comments about that will also be of interest to investors.”

But overall, Bowman highlights that with the group appearing to remain on track to meet its own 2016 and 2018 growth targets, “the analyst consensus opinion points towards a ‘buy’”.

House-builder Berkeley Group follows on Wednesday with its full-year results. The last 12 months has been kind to its investors, with the FTSE 250 firm’s shares up 33% over the period.

While the general broker view has the stock in ‘buy’ territory, given its strong rally, sentiment has cooled in the last three months. Admans, who rates the business a ‘buy’, notes that in its previous trading update, it reported good demand but also forecast that activity in the housing sector generally would return to more normal levels this year.

He says: “As a result investors will be watching out for any signs of that in these results. Given the general election outcome, investors will also be interested in any comments on what effect government policy may have on the sector. Berkeley is in the middle of a substantial capital repayment plan to shareholders so income-seeking investors will be keen to hear if the expected 90p payment in September is now confirmed. Any other news on future payments will also be welcomed.”

Discount retailer Poundland delivers its own set of full year 2014/2015 results on Thursday. Given the group’s Dealz outlets in Ireland and weakness in the euro against the pound, full year profit forecasts for the financial year ahead have recently come under some downward pressure according to Bowman.

He adds: “A trading update from peer B&M has also injected caution, whilst uncertainty regarding the group’s takeover of 99p Stores, given its referral to the UK Competition and Markets Authority, still prevails.

More favourably, management may again underline the ongoing rollout of new stores in the UK & Ireland, along with its trial in Spain, whilst Poundland ended the 2015 financial year with net cash of £13.9m. Bowman says: “In all, with currency pressures and takeover uncertainty pitted against its store rollout programme and an expected 19% rise in 2014/2015 pre-tax profit, analyst opinion currently denotes a ‘hold’.”

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