Does J D Wetherspoon plc have investment appeal after today’s results?

Could J D Wetherspoon plc (LON:JDW) (JDW.L) offer share price growth potential for the long term?

J D Wetherspoon
J D Wetherspoon

J D Wetherspoon plc (LON:JDW) (JDW.L) has released full year results today which I think are generally positive.

The company’s like-for-like (LFL) sales growth during the period was 5%, with revenue moving 4.2% higher then the same figure for the previous year (when 2017’s 53rd week is excluded).

Operating profit is up 4.8%, while profit before tax has increased by 18.6% after exceptional items. This represents a record year for the company, with it performing well in my view during what has been a challenging period for the leisure sector.

In the current financial year, the company has made an encouraging start according to today’s update. In the six weeks to 9 September, LFL sales growth has been 5.5%. However, given the expected increase in taxes, labour and interest costs, the company believes that a LFL sales growth figure of 4% will be needed in order to equal 2018’s record level of profit.

In my opinion, J D Wetherspoon is performing well. It has been able to deliver strong growth in a weak UK economy, where consumer spending is under at least some pressure at the moment. With inflation being behind wage growth and expected to remain so over the next few years, though, this situation could ease over the medium term.

Brexit may hold back the performance of the company’s shares to some degree, simply because the business is UK-focused. As a result, I wouldn’t be surprised if there is heightened volatility across the sector, since consumer confidence could be impacted by the terms of Brexit.

In the long run, I remain relatively optimistic about the prospects for the J D Wetherspoon share price. I think it has a good management team that is successfully executing a sound strategy. This could lead to improved financial and investment performance over the coming years.

About Robert Stephens 5138 Articles
Robert Stephens is a CFA Charterholder and an Equity Analyst by trade. He is a passionate private investor who has been buying and selling shares for many years, owning a wide range of UK shares in the process. He has written for Citywire and The Motley Fool US and now runs his own business. To contact Robert, please email [email protected] or use one of the other contact methods available on the 'Contact Us' page