Loungers PLC (AIM:LGRS) is being tipped for a big profit jump tomorrow as the café/bar chain’s expansion continues apace.
Peel Hunt sees profits rising by 46% in 2024 (with the second half up 49%), driven by a 15% expansion rate, 7.5% like-for-like sales growth, and better margins.
Compared to pre-pandemic benchmarks, LFL sales increased 26% in 2024E (the 12 months to April).
During the financial year, 2024, 36 new sites were opened, with new openings continuing to perform well.
Peel Hunt expects another 34 openings this year with net debt (excluding leases) ending the year at £9.7m. Rent is around 4.4% of sales.
The broker said it had already upgraded per-tax forecasts by 8% following the full-year trading update, though what it says about the current year will be key as comparators will be tough.
Loungers currently has one of the lowest valuations, based on underlying profits and cash flow, adds the broker.
Buy for growth and re-rating potential with a target of 375p, is the investment view.
Shares today were unchanged at 284p, close to a five-year high.