Funny beasts, hotel stocks. Are they valued for their asset bases, their brands or their cash flows? easyHotel (EZH), which owns, develops and franchises budget hotels, would rather we concentrate on revenue per available room (RevPAR), the industry metric of choice. On that count, the company is doing rather well.
Although RevPAR is self-calculated, results for the year to September 2017 carried assurances that growth was “particularly strong” in London in the first half of the year, and improving elsewhere. Drill down, and other numbers offer further cheer. Average occupancy in the owned estate increased from 82.1 to 86.7 per cent, the average daily rate per room climbed 4.8 per cent to £41.90, and even more strongly in the franchised estate. Meanwhile, the group’s average TripAdvisor score - another potentially flawed (though crucial) measure – climbed from 3.3 to 3.5 stars (out of five).
Ultimately it is profits that count, and so investors may well wonder why a strong operational performance hasn’t fed through to the bottom line. Aside from a hike in the tax charge, earnings were hit by a £0.24m impairment incurred in the closure of the Old Street easyHotel, and the absence of the £0.28m favourable capital gain booked in 2016.
On average, analysts expect adjusted pre-tax profit of £0.85m and EPS of 0.7p in the year to September 2018, compared with £0.86m and 1.3p in FY2017.
| EASYHOTEL (EZH) | ||||
| ORD PRICE: | 121p | MARKET VALUE: | £ 121m | |
| TOUCH: | 117-124p | 12-MONTH HIGH: | 124p | LOW: 83p |
| DIVIDEND YIELD: | 0.3% | PE RATIO: | 172 | |
| NET ASSET VALUE: | 70p | NET CASH: | £21.2m | |
| Year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend share (p) |
| 2013* | 2.64 | 1.37 | 4.1 | nil |
| 2014 | 3.54 | 0.57 | 1.2 | nil |
| 2015 | 5.54 | 0.79 | 1.0 | 0.33 |
| 2016 | 6.02 | 1.09 | 1.4 | 0.33 |
| 2017 | 8.42 | 0.86 | 0.7 | 0.33 |
| % change | +40 | -21 | -50 | - |
| Ex-div: | 18 Jan | |||
| Payment: | 15 Feb | |||
| *Pre-IPO trading. | ||||
