Hold on tight… Alton Towers owner can still bring shareholders thrilling profits
MERLIN Entertainments, which owns Madame Tussauds, Alton Towers, Legoland and a host of other attractions, floated last November at 315p. The sellers were also private equity firms, but Midas recommended buying stock and, reassuringly, the shares have since risen by almost 8 per cent to 3391⁄ 4p.
Last week, the company issued an upbeat trading statement, saying underlying sales rose 12 per cent in the first 18 weeks of 2014. Though this pace of growth is unlikely to continue, City brokers are optimistic about the stock, suggesting the price should rise to at least 400p over the next year.
The company owns 99 attractions in 22 countries, including America, China and Australia. The recently released Lego film has boosted visits at Legoland parks from Chicago to Tokyo and reasonable weather in Europe so far this year has also boosted Merlin’s sales.
Brokers expect profits to rise from £186million in 2013 to about £230million this year and £255million in 2015. A maiden dividend of 5.85p is forecast for 2014, rising to 6.4p the following year.
Midas verdict: International travel is growing, especially as people from emerging markets become more affluent. Merlin should benefit from this trend.
The company is also expanding, opening its 100th Sea Life earlier this year, adding accommodation to several theme parks and launching new attractions, such as one based on the Shrek films.
Investors who bought in November should hold. New investors could buy on weakness.