18.12.2024
The year to end September 2024 saw record revenues at Hollywood Bowl, the UK and Canada's largest ten-pin bowling operator, up some 7.1% at £230.4m (£215.1m), but with a 5.2% easing in adjusted pre-tax profits at £45.0m (£47.5m).
That saw earnings fall back 12.5% to 17.42p (19.92p) per share.
CEO Stephen Burns stated that:
"We are pleased to report another strong performance reflecting the ongoing demand for family friendly, affordable leisure.
Following a year of record levels of investment, our proven growth strategy continues to deliver strong returns.
Bowling is unique in its ability to appeal to a wide demographic with anyone able to take part, and we are confident in the ongoing strong demand for fun and inclusive family-friendly experiences at an affordable price.
The outlook remains positive as we continue to expand and innovate in the UK and seize the significant market opportunity in Canada."
Analysts at Berenberg raised their target price for the shares from 420p to 440p, while stating that the group remains a top pick in the leisure space, after it reported a record full-year performance, with strong growth despite tough comparatives and cost headwinds.
"Hollywood Bowl remains positive about its prospects in FY25, with trading performance starting well in the year and the company on track to meet its target of 130 centres by 2035.
We expect positive like-for-like growth in FY25 and the impact from National Insurance changes to be partly mitigated."
Given its best-in-class management team, solid balance sheet and long runway for growth, the shares now trade on a price-to-earnings ratio of 14.6x and 14.1x on the Berenberg FY25/FY26 estimates.
After falling 11.5% yesterday, by 38.50p, the group’s shares, now 295p, are some 60p below last April’s High of 355p.
They could fall back further, before resting at the lower levels, ahead of a climb forward again.
(Profile 14.11.19 @ 240p set a Target Price of 300p*)
(Asterisks * denote that Target prices have been achieved since Profile publication)
Mark Watson-Mitchell is a Director of SQC research (www.sqcresearch.com) which specialises investment comment on smaller quoted companies.
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