Market's view on Mitchells & Butlers
Published on April 2024
- Mitchells & Butlers (MAB) has been described as inexpensive despite having a strong balance sheet and building momentum, with year-to-date sales growth reported at 9.1% and total sales growth at 10.5%.
- Stock watcher notes that the value of assets was written down, accounting for most of the recent loss, yet interest rates falling could mitigate this impact.
- No dividends were declared or paid during the current period under review.
- Concerns are raised regarding the sustainability of MAB’s business model due to high debt and minimal profitability relative to this debt, despite having substantial property assets.
- HSBC upgraded MAB’s target price and status to ‘buy’, while Jefferies also upgraded their recommendation and raised the target price.
- MAB’s recent Interim report showed a decline in operating profit and profit before tax compared to the previous year, but a reduction in net debt was noted, with management focused on cost-efficiency and sales increase initiatives.
- A stock watcher expressed uncertainty about whether to sell, hold, or buy more shares based on the current stock price around 200p.
- MAB’s pension fund deficit is expected to be resolved by the end of the year, potentially leading to the resumption of dividends.
- Local refurbishments of outlets have been noted to be popular, suggesting positive outcomes if executed on a national scale.
- Overall, there’s a positive outlook with the medium-term cost improvements expected as inflation pressures recede, despite potential near-term economic challenges impacting consumer spending.