In a previous blog post I favoured marston's PLC as my one to watch stock in 2018 and beyond. Marston's is expanding in challenging market conditions. if this company can prosper in the present market and expand. How will if fair in favourable market conditions? very well if you ask me.
Pub chain and brewer Marston’s (LSE: MARS) took a bold step when it acquired rival Charles Wells in 2017. But the deal seems to have worked out well so far. Charles Wells brewing portfolio has added names such as Courage and Bombardier to Marston’s brands like Pedigree and Hobgoblin.
Acquiring the smaller firm’s pub estate has also increased Marston’s presence in London and the South East, two important markets.
Like other pub groups, this firm has already endured a difficult few years of reshaping and updating its pub estate. This process is now starting to deliver results, with growth in sales and underlying earnings during the 16 weeks to 20 January.
Like-for-like sales rose by 2.6% in Taverns and by 1.1% at Destination and Premium locations, excluding the impact of two snowy weeks during the period.
What could go wrong?
One headwind at the moment is the restaurant sector, which is struggling with overcapacity and discounting heavily. If consumer spending weakens, pubs could be forced to cut their own prices in order to attract customers.
As things stand, Marston’s earnings are expected to remain flat at 14.2p per share this year. A dividend of 7.7p per share is expected by brokers, giving a forecast P/E of 7.2 and a prospective yield of 7.5%. These shares are on my watch list.
Disclaimer: This is not financial advice. the information here is for entertainment and educational purposes only.
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