Hollywood Bowl Group PLC could be in line to further ramp up shareholder returns after unveiling a £10 million share buyback on Tuesday, analysts have said.
Having ended last year with £28.7 million in cash, the FTSE 250 bowling centre operator said repurchases equating to around 2% of its issued capital would be carried out by next January.
Shore Capital analysts repeated a ‘buy’ rating for Hollywood Bowl in response, noting ramped up returns could be on the horizon.
An expected £20 million of investment would likely leave cash flow flat this year, analysts acknowledged, before a rebound ahead.
“We would anticipate cash flow building strongly beyond this year as current elevated investment levels revert, leaving significant cash flow to be returned to shareholders over the medium term. We see today’s announcement as getting ahead of this schedule.”
Peel Hunt noted investment plans could leave cash flow depleted over the coming three years, though highlighted scope for changes on any further improvement in sales.
“This projection is based on conservative assumptions of 2% like-for-like sales growth in 2025 and 1% like-for-like sales growth in 2026 and 2027,” Peel Hunt said.
“An additional 1% like-for-like sales growth could add £2 million (4%) to profit in any given year.”
Shares climbed 2.8% to 280.50p on Tuesday.