Shares in Marston’s PLC (LSE:MARS) rose 5% on Tuesday after the pub group delivered a stronger-than-expected rise in profitability, with investors welcoming evidence that the turnaround is gaining momentum.
The company, which operates brands such as Pitcher & Piano, Revere, and more than 1,400 pubs across the UK, reported pre-tax profit of £19.2 million for the first half, up from a small loss a year earlier.
Margins improved sharply, with first-half EBITDA margin expanding by 246 basis points.
This came despite a modest 1.3% rise in like-for-like sales, as timing effects around Easter held back headline growth.
The real boost came in recent trading, where like-for-like sales have jumped 10.5% over the past five weeks, lifting year-to-date growth to 2.9%.
Peel Hunt, which rates the stock a 'buy' with a 75p target price, credited recent performance to a mix of favourable weather, well-timed calendar events and operational upgrades.
These include more efficient labour scheduling, procurement improvements and the roll-out of a new order-and-pay app, which is now live in 750 pubs and has boosted revenue per transaction by 10%.
The broker also noted the success of the group’s pub conversion programme, where the first 18 conversions this year have lifted revenue by an average of 33%.
While forecasts remain unchanged for now, Peel Hunt believes the second half could deliver upside.
It sees the group’s current valuation of 6.2 times earnings before interest, tax, depreciation and amortisation as compelling, with scope for upgrades if momentum continues.
With net debt edging lower and efficiency gains more than offsetting cost pressures, Marston’s appears to be firmly back on the front foot.
The shares rose 2.02p to 43.27p