Restaurant Group investor optimism boosts shares in early trading

Wagamama acquisition adds to the company’s future plans as eight sites are scheduled to convert.

Article updated: 15 March 2019 12:00pm Author: Graham Spooner

  • Shares bounce from a five year low relieving faithful investors.
  • Market focuses on future management plans and development of the group’s operations.
  • For investors who believe in the future management’s ability to counter current problems and who have a high risk tolerance, we recommend the shares as a ‘buy’.

This morning’s full year results follow on from the Group’s highly publicised and much criticised acquisition of Wagamama but have helped provide some much needed relief for shareholders with the shares bouncing up by 8% from a five year low in early trading. However the market focus remains on the plans management have for the enlarged group going forward into a tough and competitive environment demonstrated by the number of high profile closures in 2018.

The soon to depart CEO stated current trading is in line with expectations with like for like sales up 2.8% in recent weeks and highlighting how trading has continued to be strong within its concessions business which operates in UK airports. Eight sites will convert to Wagamama this year followed by a similar number next year.

Our View on Restaurant Group - Buy

We regard the shares as a high risk ‘buy’ for investors, who believe the management and future new CEO will be able to counter the current problems in the casual dining sector and benefit from the Wagamama acquisition along with further growth at its airport concessions and pubs business. The big question is can the early signs of improving sales be maintained?

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Graham Spooner

Investment Research Analyst

Graham started out as a fully authorised dealer on the Stock Exchange trading floor and for various banks, before becoming an FSA-approved investment adviser. Now a respected voice in the media, Graham’s share tips and comments on the markets are frequently sought by the national press.