EI Group's (EIG) shares may not be trading far off their five-year high, but that hasn’t stopped the pub company from announcing a new £20m share buyback, having completed a similar £20m repurchase in March. Management believes this is the best use of surplus cash after repaying £101m-worth of corporate bonds, particularly as a similar logic prompted the last round of buybacks. Chief executive Simon Townsend also believes now is a good time to repurchase stock given the significant discount in the share price relative to net asset value.
Full-year cash profits may have been flat at £287m, but this was the "first time in a while" they didn't fall, according to Mr Townsend, aided in part by prolonged sunny weather over the summer, England’s World Cup run and the disposal of 174 properties. All three divisions – publican partners, commercial properties and managed pubs – reported like-for-like growth, contributing to a 1.2 per cent increase in net income per leased or tenanted pub. That said, the group's structure could look different in a year's time as it considers selling its commercial assets. Mr Townsend said he was "encouraged" by the level of interest from potential buyers.
Analysts at Numis expect pre-tax profits of £123m during the year to September 2019, giving EPS of 21.9p, compared with £126m and 21.9p in FY2018.
| EI GROUP (EIG) | ||||
| ORD PRICE: | 168.8p | MARKET VALUE: | £788m | |
| TOUCH: | 168.8-169p | 12-MONTH HIGH: | 189p | LOW: 114p |
| DIVIDEND YIELD: | nil | PE RATIO: | 11 | |
| NET ASSET VALUE: | 333p* | NET DEBT: | 129% | |
| Year to 30 Sept | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2014 | 632 | 36 | 5.9 | nil |
| 2015 | 625 | -71 | -13.0 | nil |
| 2016 | 632 | 75 | 14.2 | nil |
| 2017 | 648 | 58 | 11.2 | nil |
| 2018 | 695 | 87 | 15.2 | nil |
| % change | +7 | +50 | +36 | - |
| Ex-div: | na | |||
| Payment: | na | |||
| *Includes intangible assets of £313, or 67p a share | ||||
