JD Wetherspoon Share Price Forecast September 2021 – Time to Buy JDW?

Shares of United Kingdom-based pub company JD Wetherspoon (LSE: JDW) are in the red today, currently trading around the 1041p mark at the time of writing. The pub chain, which is the famous haunt of students in search of the cheapest pints, has endured one of the toughest years on the market. But many investors are seeing an opportunity to buy JDW before the share price recovers.

JD Wetherspoon – Technical Analysis

According to the financial statement produced by JD Wetherspoon, the market cap of the company is at £1.344 billion with total assets worth £2.267 billion. Revenue for 2020 was at £1.26 billion with a profit margin of -7.73%, compared to £1.82 billion in 2019.

Oscillators for JD Wetherspoon such as Relative Strength Index (14)(41), Stochastic %K (14, 3, 3)(47),  Commodity Channel Index (20)(−71) and Average Directional Index (14)(17) are neutral. On the other hand, moving averages such as Exponential Moving Average (10)(1060), Simple Moving Average (10)(1052), Exponential Moving Average (20)(1073) and Simple Moving Average (20)(1075) are indicating a sell action.

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Recent Developments

JD Wetherspoon opened its first pub in 1979 which is characterized by the wide availability of drinks and a strict policy of not playing music. It has since become one of the UK’s highest street pub chains with 700 pubs under its Lloyds No.1 and Wetherspoons trademarks. 41% of these pubs were freeholds just a decade ago. However, this was increased to 64% by last July, bringing the total worth of its freehold and long-leasehold property to £1.1 billion, which is just 4 hundred million pounds less than its market cap.

However, the pub chain has struggled massively last year due to a number of factors including supply chain issues, strict lockdown measures causing pub closures and limited venue capacities and the planned return to 20% VAT cutting into profits. Its current share price is far below its five-year average. Wetherspoon shares can rise in the future with the return of students to universities. After a long 18 month break, the company is well-positioned to capitalize on this surge in demand.

An interesting caveat in the company’s property holdings demands closer scrutiny. According to the company’s most recent annual report, investors found out that JD Wetherspoon’s properties have not been revalued since 1999. This means that the actual portfolio value could be different than the reported figure of £1.1 billion. The UK’s property prices have shifted dramatically in many parts since 1999. Thus, any bidder who wants to acquire the company would likely have to pay 2021 valuations for its freehold and long leasehold pubs rather than the 1999 prices.

Should You Buy JDW Shares?

With lockdown restrictions now easing, JDW is well-positioned to capitalize on the surge in demand that it will experience in the coming months. An attractive quality that makes it appeal to investors is its staff bonus scheme. The company pays an annual bonus to its staff which also has include free shares of the company. Compared to employee-owned companies like John Lewis, it has paid a greater percentage of profits to employees in the last 5 years. This is also welcome news to the small percentage of those skeptical regarding the company’s treatment of their employees. The lion’s share of profits will be given to their hardworking staff once the shares recover to their 52 week high. For these reasons, investors should buy JDW shares and add them to their portfolios.

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