Mitchells & Butlers, which owns Toby Carvery and All Bar One, posted a 5% rise in sales to £1.19bn in the six months ended 13 April, while profits jumped by almost 9% to £75mln.
Analysts at Liberum were impressed by the FTSE 250 group’s ability to convert top-line growth into bigger profits, which is no easy feat in an industry having to deal with soaring costs.
“M&B has reached a tipping point with sustained like-for-like (LFL) outperformance now translating to profit growth,” said a note to clients.
“Importantly, its approach is multifaceted, driven by a large number of initiatives driving both sales up and costs down across all parts of its estate.”
The City broker’s chin scratchers believe this performance is something that M&B can repeat going forward.
“Tellingly, LFL sales growth has accelerated across both the invested and uninvested estates which implies to us that it is sustainable and reflective of a more ingrained commercial culture.”
Trio of upgrades
M&B achieved the clean sweep, as Liberum upgraded its recommendation of the stock, target price and 2019 estimates.
Analysts upped their pre-tax profit forecasts by 4.6% for this year to £189.8mln, compared with previous estimates of £181.4mln.
They raised their recommendation to ‘buy’ from ‘hold’, and also hiked their price target to 340p from 270p.
M&B shares were up 2.8% to 271.4p on Friday morning, having added 7% on Thursday.