British Pub Operator J D Wetherspoon PLC’s (GB:JDW) share price jumped after the company expressed optimism about its future performance, anticipating improved results in the upcoming year. This led to a 10% jump in the company’s share price yesterday. YTD, the stock has experienced a growth rate of 46.3% in trading.
Improved Prospects
The company reported an 11% increase in sales during the 10-week period of its fourth quarter, as compared to the same period in 2019. This was mainly driven by more consumers seeking affordable choices in response to the cost-of-living crisis. The sales of both beverages and meals also witnessed an 11.5% rise compared to the previous year. This growth occurred despite concerns that customers might be adopting a more frugal approach.
The company, which closed 28 pubs in the last year, has recently put another 22 up for sale. These are the ones clashing with their own pubs in the area. The previous sale generated a cash inflow of £6.5 million, which positively impacted the financial results of the company.
Wetherspoon also stated that its full-year profits are expected to be “in line with market expectations.” It further anticipates improved results in fiscal year 2024 as the higher food and energy costs begin to stabilize.
This came as a big relief for investors after the company’s operations were severely hit by the COVID-19 pandemic.
Few analysts like the fact that the company is no longer dependent on lenders as its financial health has improved. Moreover, they were impressed with the robust performance, considering the exceptionally difficult trading conditions. On the flip side, analysts are also cautious of the headwinds in the short term and feel the share price is still around 50% lower than the pre-pandemic level.
Is J D Wetherspoon a Good Stock to Buy?
According to TipRanks’ analyst consensus, JDW stock has a Moderate Buy rating based on two Buy recommendations.
The average price forecast is 920p, which is 26.4% higher than the current trading levels.
