The restaurant group released a sales update for the six months ended 31 December 2013, which said that total restaurant sales increased by 11.5% and international sales were 16.1% higher in rand terms following weakness in the currency. FNB Securities told clients: “This result ref lects recent retail sales trends. Spur is trading on a forward P/E of around 16 times. This rating ref lects a relatively high growth trajectory which appears to be justified.”
The company should continue to show strong growth in the years ahead because of its diverse mobile operations and will continue to pay an attractive dividend of almost 5%.
We think that backing the underdog in this context is the right call to make in 2014.
In light of the recent acquisition and signs of economic recovery, particularly in Europe, there’s good scope for future earnings growth and a dividend payout.
Measures to drive operational efficiencies and cut costs are underway and we expect margin uplift over the next three years.