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Hollywood Bowl update spurs analyst upgrades

The leisure company reported strong sales and profit growth for the year to September
Hollywood Bowl update spurs analyst upgrades

A full-year trading update from Hollywood Bowl (BOWL) for the 12 months to September was followed by multiple upgrades to sales and profit expectations. Analysts at Peel Hunt increased full-year pre-tax profit expectations for 2019 and 2020 by 4 per cent and 2 per cent respectively, while N+1 Singer analysts upgraded 2020 pre-tax profits by 1 per cent. At Shore Capital, analysts increased 2019 revenue and pre-tax profit estimates by £2m and £0.6m to £130m and £26.5m, respectively.

IC TIP: Buy at 232p

Such optimism appears to be for good reason. Total revenue for the year to September 2019 is up 7.7 per cent, or 5.5 on a like-for-like basis. Pre-tax profits are anticipated to be up more than 10 per cent, ahead of market expectations. Chief executive Stephen Burns indicated positive like-for-like growth at all of the group's divivions.

Continued strong cash generation has prompted management to consider returning additional capital to shareholders, with analysts expecting this to come in the form of a special dividend of around 4.3p. The actual figure will be given at Hollywood Bowl’s full-year results announcement in December.