WHILE the Mitchells & Butlers soap opera plays itself out in the boardroom, the company is doing swimmingly. Maybe the infighting has led to a creative tension that is good for business. Whatever the reason, investors should use the 2.9 per cent fall in M&B’s shares yesterday as a buying opportunity.
The group holds some of the best assets in the business, including brands like O’Neill’s, Harvester and All Bar One. And it has a 16 per cent share of the attractive food-led pubs market – more than any of its competitors. Its balance sheet doesn’t look bad either; while others are nursing debt hangovers, Numis reckons M&B has a war chest of £500m to spend on acquisitions.
M&B trades on an enterprise multiple of 8.3 compared to 8.8 for the rest of the sector (a better measure than the standard price to earnings ratio due to the sector’s indebtedness. It deserves to be rated more highly; investors who get in now could make a tidy profit.