JD Wetherspoon share price – confident outlook prevails ahead of earnings
JD Wetherspoon is expected to see profits slip at full-year earnings, though the share price still looks strong after doubling from its 2022 low.
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JD Wetherspoon pre-tax profit forecast to decline
Pub company JD Wetherspoon reports full-year earnings on 21 March. Revenue is expected to rise 5.6% to £2.03 billion, but pre-tax profits are forecast to drop 18% to £73.93 million.
Recent strong performance
Wetherspoons provided an update on trading for the 25 weeks to January 21, 2024, showing its slow but steady recovery from the pandemic is ongoing. Like-for-like sales during this period were 10.1% higher than the same period a year earlier.
Breaking down the figures, bar sales led the way rising 11.8% year-over-year, with food sales up 7.9% and machine/slot income increasing 10.4%. The more recent 12-week like-for-like sales trend was even stronger at 11.1% growth compared to a year ago. Overall, Wetherspoon's total sales have grown by 8.4% in the year-to-date period.
While these results demonstrate Wetherspoon's sales trajectory is firmly positive, the company reiterated that the hospitality industry as a whole "has seen a consistent but slow recovery following the pandemic." Cost pressures remain intense, with Wetherspoon citing labour and energy costs in particular as being "far higher than pre-pandemic" levels, despite some easing of general inflation.
Wetherspoons expects to hit forecasts
Looking ahead, JD Wetherspoon stated it expects full-year financial results to be in line with current market expectations. The pub chain had previously projected breakeven to low single-digit profit before tax for the full 2023/24 fiscal year.
Wetherspoon's founder and chairman Tim Martin said the company is "concentrating on the key strengths of the business: referring to its affordable pricing, wide range of drinks and pub food, and commitment to outstanding customer service. With over 800 locations across the UK and plans to open several new pubs this year, Wetherspoon remains optimistic about its prospects despite the challenging operating environment.
Analyst ratings for JD Wetherspoon
Refinitiv data shows a consensus analyst rating of ‘hold’ for JD Wetherspoon with 2 strong buy, 2 buy and 7 hold – and a mean of estimates suggesting a long-term price target of 883 pence for the share, roughly 12% higher than the current price (as of 20 March 2024).
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Technical outlook on the JD Wetherspoon share price
JD Wetherspoon’s share price has been capped by its 200-week simple moving average (SMA), now at 845.60 pence, over three weeks in late-January and early-February before slipping to its 751.50p late-February low. Since then it has managed to regain most of its losses but still trades down by around -2.5% year-to-date.
JD Wetherspoon Weekly Candlestick Chart
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A rise and weekly chart close above the 200-week SMA and February peak at 845.60p to 862.5p is needed for a long-term bullish trend reversal to be confirmed. In this case the December 2020 low and the January 2022 high at 960.0p to 989.5p would be in focus.
JD Wetherspoon Daily Candlestick Chart
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Friday’s H1 results may add some volatility to the JD Wetherspoon’s share price which once again oscillates around the 55-day SMA at 808.5p.
While the October-to-March uptrend line at 775p and, more importantly, the late-February low at 751.5p underpin, medium-term upside pressure should remain in play.
Were the 751.5p low to be fallen through, though, the September highs at 742.5p to 734.5p may be revisited but would be expected to hold. If not, the 200-day SMA at 724.2p may be revisited.
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
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