Bottom Line: At their leisure

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The Independent Online
SPOT the difference. Two leisure companies trading on similar price earnings multiples hold annual meetings at identical times, and, more or less, make the same trading comments. But the share price of one holds steady, while the other drops 8 per cent.

Ladbroke, down 16.5p, told shareholders the group was in line with budgets. Forte closed unchanged when its chairman, barely 200 yards up the road, said it met expectations.

Leading leisure analysts have not changed their profit forecasts, so why such different reactions? After all, both share the hotel industry's low occupancy levels and low room rates.

Analysts had expected Ladbroke to be upbeat following results in early March showing a 21 per cent profit fall.

Those hopes were never going to be fulfilled. Ladbroke is also exposed to the cut-throat world of DIY retailing through Texas Homecare - where like-for-like sales are still dropping.

A p/e of 22, down from 24 before yesterday's fall, is still too high for Ladbroke. Likely profits of pounds 150m this year will still be only half those made in 1989.

But Forte's p/e of 25 is also demanding too much. Its profits are moving in the right direction, but another maintained dividend this year will be barely covered.

The best hope for Ladbroke shares is if the company is awarded the National Lottery. As for Forte, sell and indulge in the company's tempting short-term breaks.