Pub owner Marston’s PLC (LSE:MARS) half-year update was more encouraging than a quick glance at the numbers might have indicated, suggests broker Shore Cap.
Notably, pub profitability was up materially, trading continued to remain robust into the second half, dividend income from CMBC increased and debt reduction was ahead of forecast, said the broker.
In particular, pub operating profit increased by 22% to £52.7 million, including like-for-like sales growth of 7.3% and an improvement in the operating margin to 12.3%.
“It has been a while since MARS has been able to tick all these boxes”, said ShoreCap, adding: “Although we retain our full-year estimates, momentum is building, mix is improving and leverage falling.
“With the glass looking more than half full we struggle to square these trends with a forward PER of just five times.”
'Buy' is the broker’s investment view. The hares were down 1.4% at 36p on Tuesday.