Restaurant Group's solid first-half showing is all the more impressive considering the weak state of the economy and dire consumer confidence. The company is stepping up the expansion of its estate, too - add that to the hefty dividend hike and the shares remain attractive.
The group's core restaurant brands, Frankie & Benny's and Chiquito, benefit from being typically sited on retail and leisure parks where they are often the only restaurant options. That helped like-for-like sales rise 3.25 per cent in the period - a rate that's been maintained during the early weeks of the second half. A total of 13 new sites have opened already this year, too, leaving the group on course to open 25-30 over the full year. Half of these will be in the Frankie & Benny's format but management is also opening new pub restaurants and has launched a new brand, Coast to Coast, which should have three sites by the year-end.
Avoiding high street promotional battles has also allowed Restaurant Group to maintain its operating margin at 10.8 per cent, while solid cash generation has helped the net debt pile fall 25 per cent year on year.
Broker Panmure Gordon expects full-year EPS of 23.77p (21.84p in 2011).
RESTAURANT GROUP (RTN) | ||||
|---|---|---|---|---|
| ORD PRICE: | 331p | MARKET VALUE: | £663m | |
| TOUCH: | 331-332p | 12-MONTH HIGH: | 334p | LOW: 257p |
| DIVIDEND YIELD: | 3.3% | PE RATIO: | 16 | |
| NET ASSET VALUE: | 87p* | NET DEBT: | 22% | |
| Half-year to 1 Jul | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 234 | 17.2 | 5.63 | 4.00 |
| 2012 | 252 | 26.1 | 9.63 | 4.50 |
| % change | +8 | +52 | +71 | +13 |
Ex-div: 12 Sep Payment: 10 Oct *Includes intangible assets of £26.3m, or 13p a share | ||||
