Can Shares In Restaurant Group PLC Beat Tesco PLC, Unilever plc, Whitbread plc And WM Morrisons Supermarkets PLC After Results?

Will Restaurant Group PLC’s (LON:RTN) (LSE:RTN.L) share price outperform those of Tesco PLC (LON:TSCO) (LSE:TSCO.L), Unilever plc (LON:ULVR) (LSE:ULVR.L), Whitbread plc (LON:WTB) (LSE:WTB.L) and WM Morrisons Supermarkets PLC (LON:MRW) (LSE:MRW.L)?

Restaurant Group PLC
Restaurant Group PLC

Shares in Restaurant Group PLC (LON:RTN) (LSE:RTN.L) have risen 3.3% so far today after it released 2016 results to the stock market. Restaurant Group has completed its strategic review of its brands and is confident in its ability to turn its financial performance and share price performance around.

The company will seek to do so through 4 key areas. It will aim to grow its Pubs and Concessions business, build a leaner, faster and more focused business, improve customer service and re-establish the competitiveness of its Leisure brands. In my opinion, this is a sound strategy and I believe it could make a positive impact on the company’s shares in the long run.

Regarding Restaurant Group’s performance in 2016, it was a challenging year. Total revenue increased 3.7% to £710.7 million, with LFL sales down 3.9%. Adjusted profit before tax was 11.2% lower at £77.1 million. Adjusted earnings per share was also down 11.2% to 30p. However, FCF remained strong at £78.9 million and the full year dividend was maintained at 17.4p per share. Due to an exceptional charge of £116.7 million which primarily reflects site closures, impairments and provisions for onerous leases, the company reported a statutory loss before tax of £39.5 million.

In the last 3 months, shares in Restaurant Group have declined 17%. That’s behind the share price performance of consumer peers Tesco PLC (LON:TSCO) (LSE:TSCO.L), Unilever plc (LON:ULVR) (LSE:ULVR.L), Whitbread plc (LON:WTB) (LSE:WTB.L) and WM Morrisons Supermarkets PLC (LON:MRW) (LSE:MRW.L). Unilever’s shares are up 9%, Morrisons is 21% higher, Tesco is up 10% and Whitbread’s shares are 9% lower.

In my view, Restaurant Group has long term investment appeal. However, I think this year will be difficult for it. Although it is trading in line with expectations so far this year, I think a difficult UK economy and a major turnaround plan may hamper its short term progress. Therefore, I’d rather buy Unilever, Tesco, Whitbread or Morrisons because I feel they offer more defensive qualities in what may be a difficult year for UK consumer shares.

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