Whitbread Share Price Forecast December 2021 – Time to Buy WTB?
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Shares of multinational British hotel and restaurant company Whitbread (LSE: WTB) are in the red today, after closing at £2968 as of December 29th (17:50 GMT). Premier Inn owner Whitbread still has enough room for growth in domestic markets but also has a huge opportunity to replicate its UK success in Germany.
Whitbread – Technical Analysis
According to the financial statement, the market cap is at £6.046 billion with total assets worth £8.903 billion. Revenue for 2020 was at £5.88.90 million with a profit margin of -153.93%, compared to £2.06 billion in 2019.
Oscillators such as Relative Strength Index (14)(52), Stochastic %K (14, 3, 3)(77), Commodity Channel Index (20)(81), Average Directional Index (14)(28) and Awesome Oscillator(−15) are neutral. On the other hand, Moving averages such as Exponential Moving Average (10)(2907), Simple Moving Average (10)(2856), Exponential Moving Average (20)(2915), Simple Moving Average (20)(2877) and Exponential Moving Average (30)(2951) are indicating a buy action.
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Recent Developments
Whitbread was founded as a brewery back in 1742. The company’s brands include the restaurant chains Beefeater, Brewers Fayre and Table Table and its largest division, Premier Inn, which is the largest hotel brand in the UK with over 785 hotels and 72,000 rooms. The company announced that 6000 of its employees could lose their jobs due to the pandemic on September 2020.
Back in October, the company published its interim results which revealed that revenues in H1 hit £661.1 million, compared to the £250.8 million reported in the same half last year. This is still 39% below pre-pandemic levels largely because only essential business guests were permitted to stay in hotels until 17 May. The company recorded a 9.7% year-on-year increase in accommodation sales for September.
Whitebread incurred a loss of only £56.6 million, which was £310.8 million less than the loss reported last year. Before the pandemic, it made a profit of £235.6 million before the pandemic. Dividends have been banned by the company’s lenders until things improve, which isn’t expected till March 2023. The company is starting to see some upside after the pandemic. But it is not immune to everyday challenges such as lack of labour, increased raw material costs and lorry driver shortages. The company had to spend £23m on increasing salaries and paying out bonuses.
On the positive side, the company reported some good metrics for its German expansion where is has 73 hotels. Revenue from Germany is up 197.3% over FY20, while room occupancy grew to 47% in Q2, and then to 60% in August and September.
Should You Buy WTB Shares?
Whitbread has good growth prospects for the next year and beyond. It has a huge opportunity to replicate its UK success abroad in Germany. Whitebread can take advantage of the situation as the pandemic has taken capacity out of the market, and with surviving competitors more financially constrained.
Its reports for the six months to 26 August indicated that Premier Inn’s recovery was ahead of expectations. But increasing concerns over the resurgence of the pandemic can set back the recovery and hold back Whitbread’s share price. The company’s management has set an aim for returning to pre-pandemic UK profit margins at some point. Another winter lockdown could affect the share price badly. Inspite of this, Whitbread presents a good balance between risk and reward, which is why investors should buy the shares at this moment.
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