The Investment Column: Wetherspoon dips in growth glitch

Has the JD Wetherspoon bubble burst? A darling of the stock market and the drinks sector its shares have raced away ever since it floated. However, analysts downgraded profits figures at the start of the year after the company indicated that a slowdown in new pub openings and higher costs associated with introducing new lined glasses to give customers a full pint, could affect first-half profits. The result: the shares have underperformed the market by a quarter since January.

Yesterday's first-half figures, showing a 20 per cent rise in underlying pre-tax profits to pounds 9.7m for the six months to February, reassured investors that Wetherspoon's growth had not stalled and its shares rose 15p to 301.5p. But doubts remain. Wetherspoon has proved it is fallible and it will find it increasingly difficult to keep up the same rate of growth it has achieved in the past. The World Cup is bound to hit sales during the summer as football fans flock to pubs with televisions, competition is hotting up as the big pub chains pump billions of pounds into the market and sites are becoming harder to find.

While Wetherspoon should still be able to fund its ambitious expansion programme without issuing more equity, its finances are looking a bit tight and it has been forced to sell pubs and lease them back to buy new sites.

That said Wetherspoon will open 50 new pubs in the second half alone and more than double the size of its estate by 2001. Margin pressure should also be short-lived.

Panmure Gordon forecasts current year profits of pounds 22.9m rising to pounds 32.8m in the following year putting the shares on a prospective p/e ratio of 28 then 21. The shares deserve their premium rating. Hold.

Start your day with The Independent, sign up for daily news emails
News
ebooksAn unforgettable anthology of contemporary reportage
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Payments Operations Assistant

£23000 - £25000 per annum: Recruitment Genius: They win lots of awards for the...

Recruitment Genius: Telephone Debt Negotiator

£13500 - £20000 per annum: Recruitment Genius: This nationwide enforcement com...

Guru Careers: Communications Exec / PR Exec

£25 - £30K: Guru Careers: We are seeking a highly-motivated and ambitious Comm...

Guru Careers: Pricing Analyst

£30 - 35k: Guru Careers: We are seeking a Pricing Analyst to join a leading e-...

Day In a Page

On your feet! Spending at least two hours a day standing reduces the risk of heart attacks, cancer and diabetes, according to new research

On your feet!

Spending half the day standing 'reduces risk of heart attacks and cancer'
Liverpool close in on Milner signing

Liverpool close in on Milner signing

Reds baulk at Christian Benteke £32.5m release clause
With scores of surgeries closing, what hope is there for the David Cameron's promise of 5,000 more GPs and a 24/7 NHS?

The big NHS question

Why are there so few new GPs when so many want to study medicine?
Big knickers are back: Thongs ain't what they used to be

Thongs ain't what they used to be

Big knickers are back
Thurston Moore interview

Thurston Moore interview

On living in London, Sonic Youth and musical memoirs
In full bloom

In full bloom

Floral print womenswear
From leading man to Elephant Man, Bradley Cooper is terrific

From leading man to Elephant Man

Bradley Cooper is terrific
In this the person to restore our trust in the banks?

In this the person to restore our trust in the banks?

Dame Colette Bowe - interview
When do the creative juices dry up?

When do the creative juices dry up?

David Lodge thinks he knows
The 'Cher moment' happening across fashion just now

Fashion's Cher moment

Ageing beauty will always be more classy than all that booty
Thousands of teenage girls enduring debilitating illnesses after routine school cancer vaccination

Health fears over school cancer jab

Shock new Freedom of Information figures show how thousands of girls have suffered serious symptoms after routine HPV injection
Fifa President Sepp Blatter warns his opponents: 'I forgive everyone, but I don't forget'

'I forgive everyone, but I don't forget'

Fifa president Sepp Blatter issues defiant warning to opponents
Extreme summer temperatures will soon cause deaths of up to 1,700 more Britons a year, says government report

Weather warning

Extreme summer temperatures will soon cause deaths of up to 1,700 more Britons a year, says government report
LSD: Speaking to volunteer users of the drug as trials get underway to see if it cures depression and addiction

High hopes for LSD

Meet the volunteer users helping to see if it cures depression and addiction
German soldier who died fighting for UK in Battle of Waterloo should be removed from museum display and given dignified funeral, say historians

Saving Private Brandt

A Belgian museum's display of the skeleton of a soldier killed at Waterloo prompts calls for him to be given a dignified funeral