Whitbread full-year earnings preview – can its share price recover from its 1-year low?
Strong revenue and profits growth expected
Hospitality company Whitbread, owner of Premier Inn and Beefeater brands, is set to release its latest annual financial results on April 30th. Analysts expect Whitbread to report strong growth in both revenues and profits compared to the previous year, despite broader challenges facing the hospitality industry amidst economic pressures on consumer spending.
According to LSEG Eikon, Whitbread is predicted to announce a 14% increase in total revenues to £2.99 billion for the 2023/24 fiscal year. Pre-tax profits are also expected to jump over 32% to £545 million, up from £413.4 million the prior year. This growth is largely attributed to Whitbread's expansion of its Premier Inn hotel chain, having added around 2,000 new rooms over the past year.
Premier Inn has performed particularly well, with revenues per available hotel room surging 40% above pre-pandemic levels. This is credited to its competitive room rates and high occupancy levels compared to rivals in the mid-range hotel segment. However, inflation and cost-of-living challenges for consumers may start to impact leisure and hospitality spending going forward.
While Whitbread's UK hotel business is thriving, profits from its German hotels are predicted to be down for the year, although longer-term growth is still expected from the company's investments in that market. Investors will also be looking for updates on the performance of Whitbread's pub and restaurant brands, like Beefeater and Brewers Fayre, which are more exposed to discretionary spending pressures.
Overall, Whitbread remains in a strong financial position within the hospitality industry, having bounced back strongly from pandemic restrictions over the past two years. However, with consumers having less discretionary income, Whitbread may start to see some impact on occupancy levels and may need to balance profit margins with competitive room pricing.
The upcoming financial report will give key insights into management's outlook for consumer demand and Whitbread's growth strategy for the coming year across its core UK market and expansion in Germany. Investors will be assessing the resilience of Whitbread's brands and monitoring economic trends closely to gauge future performance after two years of recovering revenue and earnings growth.
Analyst ratings for Whitbread
LSEG Refinitiv data shows a consensus analyst rating of ‘buy’ for Whitbread with 5 strong buy, 10 buy, 5 hold and 1 sell – and a mean of estimates suggesting a long-term price target of 4,008 pence for the share, roughly 31% higher than the current price (as of 29 April 2024).
Technical outlook on the Whitbread share price
The Whitbread share price, down around 15% year-to-date, continues to trade at levels last seen a year ago with the 200-week simple moving average (SMA) at 3,014 pence and the psychological 3,000p region offering support, though.
Whitbread Weekly Candlestick Chart
Were a fall through last week’s low at 2,996p to be seen on a weekly chart closing basis, the July 2021 and March 2023 lows at 2,765p to 2,756p may be back on the plate.
For any kind of hope for a lasting bullish reversal to become credible, not only the February-to-April downtrend line at 3,163p and last week’s high at 3,169p would need to be exceeded, but also the late-March high at 3,357p.
Whitbread Daily Candlestick Chart
Only a daily chart close above the 3,357p late-March high and ideally also the 200-day SMA at 3,397p would allow for the January peak at 3,714p to be back in the limelight in the first instance.